Greenspan: aging population is the root cause of global investment contraction
On 12 November, a brilliant dialogue was on the “The Change and the Invariant of the Times”-themed “<Finance> Annual Meeting 2020: Forecast and Strategy”. Former President of the Federal Reserve, Alan GREENSPAN, and President of the National Institute of Finance, Tsinghua University, Zhu Min, former Vice-President of the International Monetary Fund, from the population of the population, the expenditure of social welfare and investment in savings, whether the world has entered the recession, the trade friction between China and the United States, and the digital currency, The central bank’s independence is a hot topic.
Greenspan pointed out that the biggest feature of the 21 st century is an ageing population, which is why investment in the United States and even around the world has shrunk. As a result of the ageing population, social welfare spending in the United States and the United Kingdom has increased significantly. Welfare spending has squeezed out the space for total domestic savings and thus squeezed out total domestic investment, which is the main determinant of productivity growth. Speaking of China, Greenspan said that over the past five years, China has always ranked first in terms of per capita output growth in the world’s major economies. China’s savings and investment account for a much higher proportion of GDP than in the United States, which is also China’s actual per capita GDP and An important reason for the sharp rise in living standards. But China’s social welfare spending is crowding out total savings in the same way as the United States and the United Kingdom.
In Greenspan’s view, an ageing population is an irreversible trend, but to stop investment slowing and productivity growth slowing, we must try not to let social welfare squeeze the room for domestic savings. Greenspan said Sweden is aware of the problem. Because social benefits are too high, there are a lot of problems, such as inflation rising to 500 percent, the system almost collapsing, and then they changed to adopt pension DC instead of DB, that is, fixed spending instead of the original fixed income. Sweden seems to have solved the problem, but the Swedish experience is not feasible for other countries. “the rest. The country is unlikely to go back to the past, because we will have more and more elderly people, they will make up more and more people, and social welfare spending will be more and more. I have been thinking about this question for many years, and I have not got a simple answer, because no matter what the answer is, it will not be a very simple answer. But no matter what you do, every country, especially all developing countries, must solve the problem and overcome the difficulty. If social welfare had not been so high, growth in the world would have been much higher than it is today. ” Greenspan pointed out
Since the second half of this year, a number of countries around the world continued to slow economic growth, bond issuance negative interest rates and so on. A discussion of the global recession has been hotly discussed around the world. In Greenspan’s view, there is no doubt that the economy is weaker, but it is too early to say that the recession is still too early. “the weekly gap in industrial output is shrinking, including the volume of industrial production, but it can’t be called the beginning of a recession yet.” Greenspan said that in the past 50 years, the starting point of all recessions has been in the net borrowing range, but we (the United States) are still in the lending stage, so in the short term the recession The risk is very small. Globally, the world is likely to enter inflationary rather than deflationary pressures. “this is very likely to happen. I can’t call it a so-called “recession,” but globally, it’s a state of stagnation. “
Greenspan believes that the United States and China now dominate the flow of global trade in goods and services and the balance of trade in services, in the current tariff campaign, there are no so-called winners or losers. “our tariff war, the trade war, the so-called winners, will also have taxes on their own producers, so it will eventually return to a basic point, that is, to increase tariffs. The tariff itself will return to the people of their own country. ” The United States today exceeds China’s tariff revenue in terms of total tariff revenue. He said that tariff revenue is tantamount to taxing businesses and residents, and it is sad that policy makers today do not understand these basic economic rules. The law, so the trade war is likely to continue. He called for, “the so-called winner of the tariff war is in fact the loser, but the problem of losing more or less. There is no real winner in the tariff war. We hope that there will be more reasonable actions or measures to stop such a so-called trade war or tax war as soon as possible.”
This is a very exciting speech, a 90-year-old, a retired former Federal Reserve chairman, his life experience and our shared vision of the world.