As Bob Dylan says in his song, “The Times They are a Changin.” His point was clearly illustrated at the recent Industrial Asset Management Council conference held in New Orleans this month.
The keynote remarks by Peter Zeihan, author of “The Accidental Super Power,” were a glimpse into our geopolitical future. He described the strategic importance of geography in determining a country’s future through its natural transportation system and its agricultural resources.
These assets, combined with demographic changes taking place in the world, create two powerful forces driving the world toward an inevitable future. In his talk, he discussed the plight of the aging demographics of the major developed countries such as Japan, as their population ages without the youth to provide the energy to drive their economies. The decline of the working age population and the income that goes with it will limit the markets for goods and services in many countries throughout Europe and the rest of world with a few exceptions.
The United States is one of those exceptions among the developed countries to be spared the plight due to the immigration of younger workers and along with the development of shale energy resources will make the US one of the “only games in town” in the “new world order.” The development of shale resources has already altered the geopolitical energy balance and will do so for decades to come causing a likely spike in energy prices in the rest of the world while remaining stable in the US.
The result of the coming international disorder will cause an influx of capital into the US by those looking for a safer haven from the coming disruptions in the rest of the world. The result will be an abundance of investment capital, keeping interest rates low and propelling the stock market to new highs.
A few other predictions by Zeihan is that Russia will invade its neighbors to create a buffer zone before its aging population depletes its army. The US will not likely intervene. China’s aging population and former one child policy will cause labor shortages and escalating wage rates. Mexico is one shining star in a rather chaotic world with a youthful population and access to US natural gas through pipelines currently under construction to supply the energy needs.
Check out one of Peter Zeihan’s presentations on YouTube to hear a fuller explanation of the geopolitical changes coming in the next 15 years.