The answer to the title above is simple; constant population growth equals constantly growing corporate profits. That’s not necessarily a good thing for the 99 percent.
The US economy is dominated by a Ponzi Scheme known as Wall Street. As corporate earnings rise, stock prices generally rise. If aggregate corporate profits go down, as they always must in time, then that 15,000+ value we see today with the Dow Jones Industrials can drop to 8,000 or less, as it did during the Great Recession.
Now imagine what would happen if the economy never came out of the Great Recession, like during the Great Depression. In October 1929, the Dow Jones was close to 400, up from less than 100 in 1921. The Depression hit that month, the economy entered into a sustained decline, the Dow dropped and dropped until it was less than 50 in October 1932. That’s a lot of speculative profits that were wiped out. The Dow began climbing with the election of FDR on November 8, 1932. But what if FDR didn’t win and the US continued down the same path? There’s a good chance the Dow would’ve dropped to a value of zero.
One way to avert such a calamity is to have constantly increasing population. As population grows, there are more people to feed, which means constantly growing demand for goods and services, which helps corporate profits rise, which keeps the Dow growing. The government will even feed and house tens of millions of people in order to keep demand up.
If, however, the US population was to decline, especially in the long-run, so too would the demand for goods and services. That means corporate profits would begin a long term drop. The financial markets would plummet in the long run. Paper profits that have grown over decades would vanish like smoke.
The birth rates of US citizens began to slow a few decades ago, and to compensate, your government opened the floodgates of immigration to compensate for that. Of course, there were other factors for doing this, as well. More immigrants meant a downward push on wage growth. The difference between what wages would’ve been in the absence of higher immigration and what they became with greater immigration went into the already fat wallets of the super rich via higher corporate profits, share prices and rising dividends.
This is not to suggest that immigration is always a bad thing, especially if there is a rising tide of prosperity for all. However, immigration during a time when there has been a massive redistribution of income and wealth flowing from the 99 to the 1 percent probably isn’t a good thing for the 99 percent. But it is good for Wall Street and the 1 percent, and for the reasons cited above.
If population growth continues to slow, and last year it grew only 0.7 percent, and middle class income continues to stagnate, then the current record rise in the Dow Jones Industrials suggests it is a bubble caused by redistributing income from the 99 to the 1 percent.
In other words, it is possible the current pathetic economic expansion is ambling down a road that ends at a very steep cliff. This brings us to a question.
Was the Great Recession just a blip on the road to an even greater Depression somewhere down the road a few years from now?
