A lot took place over the past few years that have the world turned on its ear. Between COVID, war, inflation and incompetent governments, you would think the world is coming to an end. The reality is that very little has changed. In terms of longer trends, they are still on course. If anything, there was an acceleration of what was already in place.

This is important when looking at the economic factors around the world. It is easy to get caught up in short term outlooks. However, if we maintain a broader perspective, we will not be surprised.

What drives most financial activity is demographics. It is unavoidable: people = economic activity. There is no way around it. Lose people and that declines.

Actually, a lot can be explained by the demographics of a country.

Russia Had To Attack

Putin is making a lot of waves with his invasion of Ukraine. The reality is he had very little choice in the matter. Russia is a country without much in the way of geographic defense. In fact, it is so easy to invade that even Canada is able to do it. This shows how vulnerable Russia, as a country is.

Here is the question: are you going to send a bunch of 40 and 50 year old soldiers out to win a war? If that is your situation, it seems that loss is guaranteed.

Therefore, Russia has to make a move now simply due to demographics.

If you expand the Russian demographic chart, you see that there was a baby implosion in the early 1990s. That means that those who are in their 20s, especially males, are smaller in number. The larger parts of the tree were people were people born in the 1980s. They are now between the ages of 30-40. Hence, even waiting a few years was not much of an option.

This is just one example of how world events are often driven by demographics.

What about the Russian economy?

Again, it is not looking very prosperous over the next 20 years. To start, the average life expectancy of a Russian male is very low. This is why the females in their 60s start to outnumber the males, by a wide margin. We also have a big group who are in their mid-50s and up who are going to be gone over the next decade or so.

Of course, the bottom of the tree is what tells the story. Look at how slim it gets. This economy was going to take, sanctions or not. There is no way that such a small workforce can sustain the requirements for the rest of the population.

Therefore, Russia was screwed regardless of what it did with Ukraine.

Germany Is Screwed No Matter What Russia Does

It is interesting to see how Germany finds itself in the middle of some conflict. On one hand it is siding with the West. However, it has to keep doing business with Russia since it is so dependent upon that country for its energy needs. This is even to the point where Boris "The Blowhole" Johnson is tossing out the idea that Germany should be sanctioned.

Whatever the politics of the European continent, is it actually laughable to see the Russia-Germany situation. The latter is just as screwed as the former.

Here is the German demographic tree. Keep in mind this one is 4 years old so the situation is worse now.

Source

German women in their 70s outnumber the ones in their teens. That is how upside that country is.

No matter what the source of energy, or where it comes from, there are going to be a lot less people to use it. This year is the largest the German workforce will be. From here on, it will suffer from a steady decline.

This is not good when a country is an exporter. The reason is that experts are a way to offset decline in demographics. However, since Germany already gets about 50% of its GDP in this manner, it is unlikely they will be able to increase it. This is only compounded by the fact it does not have a trade agreement with the US.

In other words, the Germans are also in for tough times not matter how the short-term events pan out.

Population Cliff Throughout The Developed World

Do a quick demographic search of any of these countries:

• Canada
• Japan
• South Korea
• China
• Italy
• Spain

We see the same story told repeatedly. The challenge is these are some of the largest economies in the world. Over the next 20-30 years, we are going to see major economic contraction in these areas.

In other words, we are going to see Japan 2.0. And 3.0. And 4.0.

It is just going to keep happening. Even in China, they are now facing a medium age of 50 by 2050. This is going to cause major issues with things such as pensions.

As we can see, no matter what takes place, a lot of these countries are headed down a path of major economic contraction. It is simply unavoidable.

Keep this in mind the next time someone spouts off about overpopulation. With China, and perhaps India, leading the way day, we are going to see a massive decline in the number of people on the planet by the end of the century. This will have a host of ramifications, very few of them good.

The demographics tells the story.

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