What If the EU Fractures, China Stagnates, or the U.S. Economy Worsens?(3)
3. Attempts to Create Private Currencies: Private currencies are neither new nor novel. Many have existed in the past, some niche currencies exist today (e.g loyalty points, frequent traveler bonuses, coupons, vendor credits, IOUs) and no doubt there will be more in the future. The motivation will be to seek shelter from debased currencies. The primary impetus will be to find a store or stores of value and the secondary to find a medium of exchange. Physical resources will be the basis for such currencies. These resources will be large, accessible and intrinsically valuable to people in different cultures, polities and spheres of influence. Candidates include oil, natural gas, coal, uranium, iron ore and the perennial gold and silver. Niche private currencies based on electricity or bandwidth may be attempted in limited geographies A basket of such physical resources may offer the best prospect with symbolic representations of these real things serving as exchange medium.
4. More Divergence in Worldwide Birth Rates: Global fertility rates are falling everywhere and quite rapidly but from quite different levels, which means that demographic momentum is very different in different nations. The divergence in fertility rates will increase. Birth rates will fall even further below replacement rates in Europe, Canada, Russia, Japan, South Korea, China, Vietnam, Brazil, Turkey and even Iran (whose total fertility rate is now only slightly above France). Of the advanced economies, the US will continue to be the exception with a fertility rate equal to the replacement rate (but with fertility rates in the South, Southwest and Mountain States markedly higher than in the rest of the country) and immigration providing the population boost. In Africa, the Indian Sub-Continent, Iraq, Afghanistan and Indonesia, however, fertility rates will remain well above replacement rates.
The demographic winter in Europe, Russia, Japan and South Korea will turn bitterly cold in the next 10 years largely because of pessimistic populations while China, several parts of Latin America, Iran and a few Middle Eastern nations will slide into a deepening demographic Autumn, driven by either national pessimism or public policy. The US will continue to enjoy a demographic late Summer while Africa and the Indian Sub–Continent will provide a hugely disproportionate fraction of the world’s babies. Russia will have the worst demographic profile in the world, followed by China, which will only foster greater nationalism, resentment towards other nations and greater willingness to use force in dealing with real or manufactured threats, internal and external. The demographic winter nations will record longer and longer periods of economic stagnation. Russia’s fortunes will depend almost entirely on the price of energy and minerals .Therefore, Russia will pursue a foreign policy of creating instability in world energy and mineral markets to boost the risk premium of its exports and force the pace of its nuclear technology exports.
5. Global South Will Reject US and EU Energy and Environmental Policies : As the economic, military and moral leverage of the West over the Global South declines while China, India and Brazil assume more power, the Global South will decisively reject the energy and environmental policies and prescriptions of the US, Japan and EU. Energy and food security are the two great imperatives of the Global South. Both require enormous and swift increases in electricity production (this will be explored in a subsequent essay). The only massively scalable generation technologies available in the next two decades are coal, natural gas and nuclear. Therefore, coal and nuclear followed by natural gas generation will be extensively deployed across the Global South, led of course by China and India. Indeed the Global South may well seize technological leadership in coal and nuclear generation and advanced very high voltage transmission systems from the West and hence rapidly gain global market share in power generation and transmission markets and also bid engineering and construction management talent away from the West.
6. In the US, Large Declines in Professional Capacity: Professional capacity will shrink by over 50% in finance and real estate (from peak) and by over 25% in the legal, consulting, accounting, retailing, media, fashion, advertising, non-profits and advocacy, fine dining and high end lodging industries. This shrinkage will be net of newly created solo and small group practices or emerging niche firms or freshly constituted small but very specialized and highly skilled, very lucrative, partnerships and LLCs. Some of the surplus professionals will, of course, move on to other opportunities or start small businesses based on their general competence and relationships. Some will leave the country; a few will disappear into the growing underground economy to facilitate the exodus of people fleeing from unfair taxes and unreasonable regulations (bad and expensive government), but many will face years of grinding downward mobility and only episodic employment.
