“The biggest baby boom in history,” the Financial Times calls it. No, this one is not in America… it’s in Africa… Uganda to be precise, where the population has doubled in the last 20 years. By 2030 the population is expected to double again… to 60 million. Uganda is also the world’s youngest country with more than half the population under the age of 18.
We don’t think too much about population growth anymore… not in Europe or America. In places like Italy and Spain, the local population isn’t even replacing itself. The Russians’ birth rate is so low they are practically disappearing and the Japanese too. But in other parts of the world, there are more and more mouths to feed – millions of them.
But while the world adds billions of new people… and billions (trillions!) of new paper money… it doesn’t add very much in the way of wheat fields or cattle ranches. No, dear reader, there are some things are easily reproduced… and some things that are not. Back in the monetary Dark Ages, before the Enlightenment of 1971, people used to think you needed to bind a nation’s currency to something that was not easy to reproduce – specifically, gold. It was a way of assuring that the supply of money didn’t run wild. Now, we just have faith… we trust our financial authorities.
At least, some people do. Here at Markets and Money, we have faith in our central bankers and financial policymakers. We have faith that they will act like men, not like gods. They will make mistakes… they will yield to temptation… they will screw up the nation’s paper money and its economy; count on it. All things being equal… you could expect to see prices of gold, food, oil, etc, explode to the upside.
But all things are not equal, Malthus was wrong at the beginning of the industrial revolution; food production expanded faster than population. Will he be wrong now? Populations are exploding… and key resources (including food) are apparently reaching peak production levels. There’s only so much land. And so much water. And so much oil. What next? We don’t know…
Speaking of which, along come Nobel-Prize winning economy Joseph Stiglitz, with more bad news. He says the Iraq war could cost up to $5 trillion. In round numbers, that’s about $50,000 per U.S. family.
Would you pay $50,000 for this war?
No matter. History does not care whether you want it or not; it gives you what it wants… when it wants. And what it seems to want now is to bring the U.S. Empire down. How? Destroy its money. Destroy its economy. And waste its military power on wars of little consequence and great expense. That’s why we don’t blame George W. Bush; he’s merely doing History’s bidding… a man dull-witted enough to play along… to preside over the worst possible policies at the worse possible moment.
The U.S. government, of course, has no extra $5 trillion. It is already broke, by business standards. In effect, it has to borrow the money to continue the Iraq war. From whom? Who has the biggest pile of dollars? The communist Chinese… and the Arab oil exporters. Hmmm…
In WWI, Britain’s empire was on the downswing. It, too, had to borrow to be able to stay in the war. From whom? From the rising power – the U.S.A. America and Britain shared the same culture… the same ideas… the same legal system… even the same language, more or less. The Germans defeated, Britain could transfer leadership of the Anglo-Saxon empire to the United States with little disruption. But the rise, and subsequent triumph, of the next empire may not be so smooth or easy. We may wish we had that 5 trillion bucks.
Markets and Money