Topic: Is it a problem if the population decreases while monetary inflation remains... (Read 298 times)

If the population of a certain country or region decreases,the economy of that region will sooner or later start to stagnate,due to the lack of work force and consumers.The inflation that might be created in that region might help for keeping the economic activity,but the long term decrease of the population will lead to recession and prices going down(deflation).I live in a country,where the population is decreasing and the economy will face huge difficulties by 2050.

There is a mainstream opinion that a low inflation is good for the economy, while a negative or zero inflation is bad.
But good to whom?

Inflation means your money is decreasing value, while governments are keeping that value difference for them.
I don't trust that opinion and economic researches, as those researches are mostly paid by governments themselves.


Just for fun, when your exchange rate is 1 dolar per kilogram

Uncontrolled inflation is bad and causes a crisis for the economy. But some people argue that low inflation figures also indicate an economic downturn. If the low inflation rate indicates sluggish purchasing power. The impact of inflation is too low to encourage the central bank to reduce interest rates so that people are not too fond of saving and spending or investing money. The sluggish economy will have an impact on the termination of employment due to minimal profits and not meeting sales targets.

Even the population decreases it will not be more, that inflation rate so we can just make lower inflation and it can be OK. But inflation is not OK and it is not normal. People are now just not thinking about it or they just don't know it and it is not fair. If I would know it I would buy Dow Jones or some stocks of companies, cause FED will just support them and I will have real profit.

I don't think so, I have never see a chart where the lower class is the biggest consumer on this case, coz if we talk about the purchase power it would obviously be on the upper class population. We can't conclude this just because the lower class population is bigger than those above.
With growing population in the world, and inflation I think these two are relative to each other somewhere coz the inflation is powered by demand especially when the economy of a developing country is rapidly moving upwards, so the more the people the more it would cause inflation. When the population decreases, the inflation won't remain, it may just be slowed.

Inflation is just one of those impacts that this pandemic brought to us. There is something more about the economic crisis that we are experiencing, even those countries which have a good economy before, are now dealing with the economic crisis.

Monetary inflation will make more business to go down once it's open, this will probably decrease the value of money in the market.

To deal with this problem, the government should make a precise and more effective plan about this. Some other governments are already allowing some businesses to operate so that people can pay taxes during this quarantine.

It is not as big of a deal as population increasing while monetary inflation continues. When the population drops but the value of money decreases that means there is less people with the same amount of money available, which means a bigger chance for everyone to have some. Whereas if there are a lot more people but the inflation is higher that means some people will not have enough money at all because population increases and there are more people for same amount of money while also decreasing in value.

The main problem of inflation is still there and as long as there is a decrease in value of the fiat currency you are using that means it will not lead to anything good, decreasing or increasing population, however with over time decreasing is still better than increasing population if those are the only two things we are comparing.

If there is natural inflation due to natural disasters that are broad and large-scale. It will affect the supply of raw materials for production and natural and human resources. The scarcity of primary goods which are very significant in life causes prices to soar higher than the purchasing power of the people. In the end, the economy experienced congestion and even stopped, which eventually led to a new catastrophe of famine, plague, and death.

The decline in population certainly brings economic losses in the long run. A large population is clearly the basic foundation of a country's national economy. If the population rate decreases the unemployment rate will increase which will be followed by an increase in the inflation rate. So there is no direct correlation between the variable population size and inflation.

You could use a good system to limit the inefficiencies of typical government-regulated markets/things. A well built and structured system will greatly solve the inefficiencies and other problems. I strongly believe that one of the ways to solve this is with well decentralized consensus-driven technology with governance, regulations, rules etc


There are many who work really hard(or harder) to produce really good/quality things but usually find them hard to sell if people don't like them. They produce/sell what is really good for society but alot of people don't like them.
Many consumers tend to move toward  bad/unhealthy things if they are attractive, tasty, cheap, etc. For example, people would go for artificially-sweetened processed fruit juice instead of natural fruits, Or for white sugar instead of honey. The processed ones are normally inferior to the natural ones yet they attract lots of customers. So why not get those who produce healthy/quality ones to produce more and you get as many people as possible to buy them. Peharps, the unhealthy alternatives are too common/cheap because they are easy to make... Their makers compromise on health/quality which is kind of immoral if you ask me.
You could even make the good ones be as tasty as the poor quality ones without losing their quality and goodness.
 
I think the new consumers of healthy alternatives and their unborn generations will eventually get used to their taste

By the way, it'd be better for government to give more reward to  someone who is not earning enough but working hard and produce quality/good stuff, than giving more to someone who is able-bodied but doing nothing

If the population declines but inflation continues to rise, sooner or later the economy will collapse like Zimbabwe and Venezuela, because when an economy has fewer workers, the GDP must be low and the production is not good. . so if inflation happens it is contrary to the law of nature and the agent can only be because the government prints a lot of money. That will be a very bad sign and a sign for an economy about to collapse.

I can understand the need to imcrease the population size, especially in developed countries as one of the factors of the industrialization of an area is a lower birth rate, which is much higher in developing countries. Developed countries also has a much lower death rate and when you factor in other sources of population growth like immigration (ideally from areas which are above replacement fertility rate), a near balance could be achieved.
I can also see countries which are not so attractive to immigrants and with a sub-replacement fertility rate falling in their population size, in which case they would need to stimulate population growth one way or another.

It is, and with changes in population across different nations, it is very difficult to find a perfect balance.

I will definitely reward based on the number of hours an employee works, times the quality. Maybe you calculate how quickly he is able to finish his work without compromising on quality. For example, if two workers do thesame work (let say cleaning thesame cars with thesame equipments) and both finish the job at thesame quality, I think you could judge them by how fast they both finish the job. The fastest one get higher reward (as long as the quality of their works are thesame). 
Those who do poor quality job but finish early will be judged and paid based on the quality. You could withdraw and retrain them if they fail to improve.
 I think scoring of employees on regular basis (maybe send them their scores privately but in fool-proof way) could help them improve alot. I think scoring system could be fairer on well decentralized network. 



✳In a near perfect society, "the best" would try not to store up wealth for themselves... they make sure they keep themselves humble, serve their people(really serve them) always etc. They quietly use their wealth for the development of their societies and others. 
I think you could also incentive/encourage the best to get them to use their hugh wealth for others betterment rather than just storing up too much money that is not put into good use... or just using it to live expensive self centered lifestyle.
By the way, the perfect help in secret or quietly. They may help publicly but will hardly be proud of it.

If you don't increase your population numbers and you let it slide all the way there is only one end, extinction.
Yeah, it might sound like a fake problem when your nation is 100 million but let's see what happens in 50 years, and at that point, you will either need to breed like rats, a thing which your population doesn't want or see yourself declining more and more till you end up with 1% of what you once were.


Wait (a lot!!  ) till the next generation reaches maturity and the traces of the boom in the '60-'90 that happens in most countries disappear.
On one of my family braches, my grandfather and grandmother had together 9 bothers and sisters. My father had 4 siblings...and then...none of my cousins has more than 2 kids. None! And almost 1/3 of them have not married or are not yet having a kid although they are way over 30. And about the births rates in the lower class declining, I don't know, looking all around me I see them declining a bit but when I look at the ones in the middle class and upper class I see them dropping like a stone.I just made a quick count of my coworkers now and around one in 6 has more than one kid, and a lot of them have none, and thus speaking of only the ones married.

In the second part, you will have lower demand for goods, that's for sure but....will you have the same offer and production of goods with a declining population?
It's a tricky situation, balancing the production, the demand, and the constantly changing needs of the population if people consume more it will help to keep the balance, but to what limit can this demand grow...
I don't think there is any analyst out there or enough data to even approximate this, nor will it ever be.

Wouldn't this lead to a highly regulated and controlled market?
If the Laissez-faire theory was practiced to a extent, those who work harder and produce quality products that are needed would earn adequately from it. That's how a free market is designed to work; supply and demand. If one can supply a product to meet the demand they would thrive. Allowing the government decide who should have an edge in the market by getting more resources will break the balance.

Would you pay people based on the number of hours they work or would you times it by the skill and quality? As this is something I'm tackling with the idea of in a more socialised economy.
Doctors and people of high intellect could be worth more than normals but they also couldn't (maybe a normal with enough money at the time could've got into med school)... I think people could earn a premium but it may need to be more balanced...

Specialised to the new economy that needs to be produced you could also pay an extra rate to people that manufacture products for export - which could help boost your economy back to life again...

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It's possible for a country to be without certain resources due to mismanagement and other problems at the start of something like this too imo...

I don't see any correlation between that. It is really hard to say the relation between the decreasing of the population and the inflation of money. Monetary inflation can cause decrease in a price of a certain currency. If a country continuously print massive number of money then its value will become useless.

In terms of decreasing of population, I don't see any direct effect between them.

I guess this could happen more in an economy that people aren't motivated to work hard to mainly produce those essentials things (standard items?) that are scarce. If there is high demand for something(mostly basic things) but they are not being produced sufficiently by the population to meet the high demand, there will be inflation of the basic things.
This is one of the reasons it's not a good idea to dole out too much money for too long to people who aren't really working hard to create good/valuable things that are in high demand. One of the ways to tackle this problem, even with small or reducing population is to give more reward to people that are working really hard and producing good/quality basic things but not earning adequately from them. You could reward them with equipments/lands/shops to produce more basic things quickly (as long as they remain of good quality).
Those that aren't really working or producing sufficient good/quality basic things shouldn't be given too much money. I probably would give them special kind of "money" they can only use for the basic things that are produced by the quality hardworkers. The hardworkers automatically receive the "regular money" once given the "special money" by the non-productive customers. However, for dignity sake, it should  be possible for the non-productive ones to use the special money without people knowing for a limited amount of time...maybe 2-3yrs?

Is this persia/Iran or somewhere else? I can't think what Arab nation you're talking about (and Arab is just a race afaik)?

What is the relationship of inflation to the population or population density?
Monetary inflation is the result of the government following wrong policies and short-term treatments that made the balance of exports imbalance with imports and the government began printing more money to solve this problem.
If the country is rich and less populated, its currency will be stronger than the dollar, and the standard of living of the individual will improve, but it will harm the payment of a lot of expatriate labor in order to move the economy.

If a country has lot of resources and their population decreases then they will be called as Arab Countries. 

Pick up the history book and know what happened there, and you may get little more clarification about your doubts. This is the country where population was very less initially and they ended up digging the most essential stuff required by whole country, OIL!

With the time demand was so heavy (and still growing) they became richest country in the world. What to say about the kings and prince out there they have actaully controlled the taxes and prices of items in Dubai very smoothly and has given best possible life to their people.

The country became more cheaper for the locals since they had resources to sell outside their country.

The population as a whole is not the exact problem since there are many groups in it. The problem is with the one that contributes little or nothing to GDP, i.e., the unemployed. If this group (except housewives ) suddenly disappears I think the country will be in better shape. The problem is if the population decreases because of force majeure, usually, all groups including the one that contributes a lot to the GDP (plus the infrastructure) will be affected. Therefore it can be bad for the economy.

Assumed full employment is achievable then there is no need to keep the monetary inflation, or should I say the effect would be negative. A country with unemployment problems will tend to incentivize birth control, conversely, the one that is in full employment will tend to incentivize reproduction.

The lower class population are the biggest consumer and this contributes a lot in my opinion.
I agree that there are other factors when it comes to inflation, I think the decrease is just one of them, remember the hyperinflation of German mark after World War 1, the war reparations took a toll to the masses of Germany, and in a sense, losing a war for conquest is a big factor for inflation.

For years, the media criticized japan's declining birth and population rates. The "official" solution to paying down deficits, inflation and debt was for populations to "grow" their way out. Deficits and debt would be "paid off" by future generations with greater numbers.

There have always been issues with that explanation. An estimated 50% of existing jobs are said to be vulnerable to human workers being replaced by automation, robots and machines. Growing populations put considerable strain on housing and real estate markets, as the growth of real estate development fails to keep pace with population growth demand. Negative societal issues relating to unemployment and weak job markets trend towards elevating crime and violence statistics. State run social programs designed to help people are also strained by population growth as governments increasingly tax work to subsidize non work. Negative trends relating to pollution and consumption of raw materials are also correlated with population growth.

There are many negatives associated with overpopulation and not much guarantees any growth trend would compensate for it.

The population declines that are observable now are very small in relation to the whole population, it's usually 0.1-1%. Population is declining the fastest in the lower class, so not much value is being inherited, and it shouldn't cause a price inflation because it also lowers the demand for goods.

But inflation isn't the only thing that you should be worried about, and population decline can have other negative or maybe even positive consequences (opinions of economists here can vary).

Yeah I think resources available will have a massive impact on the economy but the more people that work in a country the richer the rich can get as more people can work for them and labour is cheaper (it's also easier to separate yourself from the ground workers imo). But this probably tops out somewhere and we see countries thriving with populations as low as a few million with some as high as around 100 million (I'm not sure of any countries with a higher population as I'm not sure if there's something they can hide better).

Highly unlikely that a nation would encourage an increase in population purely for the numbers, so the former is unlikely. It could however create an attractive environment for those looking to harness their skills (those educated in various fields) inorder to boost their workforce.
P.S; this post would better fit in the Economics board