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One of the biggest economic secrets in Japan in the decade of the 2010 decade of the “Abenomics” stimulus is why the rapid aging of the population has not improved the wages of those who have retired. About one-third of people aged 65 and over, say retirees, have started to lose their possessions, start eating junk food and going for a golf course, and then end up paying for their care when they start to fail.
Such use may imply the need for a low-level pool of young workers. This will allow people to earn more money, after which rising costs could raise prices and support the Bank of Japan in an effort to reach 2% in the mid-year.
An important point – that aging to the point where saving labor costs in the face of rising income and the need for jobs – is important in economic negotiations. Charles Goodhart and Manoj Pradhan. He says the change in numbers will turn the tide of globalization into a new era of inflation.
So far, that has not been the case in Japan. Demand for the job has grown exponentially: there are at least four open jobs in Japanese public housing for every applicant. But even when the economy was very strong around 2018, such value did not turn into high wages, inflation or interest rates.
A new paper and economists Adrien Auclert, Hannes Malmberg, Frédéric Martenet and Matthew Rognlie point out that Goodhart and Pradhan’s view is not correct, and that the decline in young Japanese labor will not be a thing of the past.
It also adds to the evidence that factors such as population growth have contributed to long-term interest rates (known as interest-free interest rates) that have a significant impact on depositors and central banks around the world.
Auclert and his colleagues say, yes, the elderly will waste the money they have saved. However, old age also limits growth, which in turn reduces the need for money and more. As a result, interest rates will rise dramatically as people age.
If the criticism is justified, then the decline in interest rates that has taken place over the past few decades is not over. Taking the current forecast as presented, the results of this paper suggest that aging could reduce real interest rates by a percentage or more between 2016 and the end of the 21st century.
Nor is it just a growing population that is new evidence of what constitutes low interest rates. In one of the papers that took place at the Jackson Hole Fed summit over the weekend, Chicago professor Amir Sufi showed a new study indicating that inequality increases interest rate than the proportion of older people.
The ways in which inequality can lead to interest rates are well known: rich families have more money, so when they get a larger share of the total income, the total cost goes up. Excessive savings return interest rates down.
Sufi and his co-authors say that savings prices are significantly different from currency than in previous years, and that even among US boomers, 10% of their savings save more than in previous generations while 90% saved less. This shows that inequality was a bigger factor than population size.
Factors affecting population and inequality can be linked, as retirement savings can be reduced, requiring reduced resources to pay for care or travel on the Mediterranean. But while inequality or population growth is at an all-time low, there is little indication that anything is about to change.
For investors, the pressure on real interest rates is a reason to expect commodity prices to remain high, and to go back to being lower. In addition, the interesting implication of population growth is that different forms of aging can lead to new conflicts in the literature around the world.
This means an increase in China’s foreign economy over the next 30 years, as the country is experiencing, due to US shortages. In the second half of the century, India’s foreign economy will grow again as the population begins to change, in part because of declining Japan and Germany – where, by then, aging.
For Jay Powell, chairman of the US Federal Reserve, excessive pressure on interest rates is one of the reasons for frustration with the recent US economic downturn. Instead of reducing it, he said in a speech to Jackson Hole, it seems that this long-standing trend “will continue to be affected by rising prices as the epidemic goes down in history”.
For central bankers, it reinforces the issue of increased inflation, so the increase in branding, then means that there are more places to reduce prices in times of crisis.
Back in Japan, where the prospect of achieving any kind of inflation is far from over, that is bad news for young working people. Many jobs in nursing homes are of little help if there are few in factories and construction sites. This, it seems, is what the future holds.