February 10, 2017
The term “First World”
refers to so called developed, capitalist, industrial countries, roughly, a
bloc of countries aligned with the United States after word war II, with more
or less common political and economic interests: North America, Western Europe,
Japan and Australia.
“Second World” refers to
the former communist-socialist, industrial states, (formerly the Eastern bloc,
the territory and sphere of influence of the Union of Soviet Socialists
Republic) today: Russia, Eastern Europe (e.g., Poland) and some of the Turk
States (e.g., Kazakhstan) as well as China.
“Third World” are all the
other countries, today often used to roughly describe the developing countries
of Africa, Asia and Latin America. The term Third World includes as well
capitalist (e.g., Venezuela) and communist (e.g., North Korea) countries as
very rich (e.g., Saudi Arabia) and very poor (e.g., Mali) countries.
First World. What a nice euphemism. Of course depending on
where a person lives in the world, they might want to attach a different label
to that collection of nations, like The Conquerors, or simply The Exploiters.
For many generations; the First World got fat at the expense of the other
“worlds”, most notably the so-called Third World. But times have changed.
economies of emerging market minnows Egypt and Pakistan could surpass the
Canadian economy by 2050, according to a “brave” new report by management
That report takes a particular metric and simply projects it
into the future. Pure numbers. So why would
choose to characterize an economic projection as “brave”? How
can mere numbers be brave? It’s because the findings of the report are economic
(and social) heresy, in our corner of the planet. The
First World will no longer be first. Indeed, arguably it will no
longer even be second. The economic forecast in the PWC report shows the
so-called First World on a steady slide to Third World status.
2050, emerging economies such as Mexico and Indonesia are likely to be larger
than the UK and France, while Pakistan and Egypt could overtake Italy and
Canada,” PWC said in a report published Tuesday.
However, this is not the only reason why the Financial Post
chose to emphasize the word “brave” when referencing the report. Readers
looking at the previous statements may not immediately see anything
particularly shocking in the findings. Egypt and Pakistan have much larger
populations than Canada. So why couldn’t their economies become relatively stronger,
in overall terms? However, that all changes when one looks at the current
differentials between these economies, using the conventional means of ranking
PWC forecast seems incredulous as Egypt’s GDP based on the more common market
exchange rates (MER) stood at US$340 billion and Pakistan a mere US$284 billion
contrast, Canada’s US$1.5 trillion massive economy placed it as the 10
largest in the world.
we get to the shocking part of this projection. Canada’s GDP is currently more
than double that of Pakistan and Egypt
Yet by 2050, according to a respected
economic consultant, both of those nations will have stronger economies than
is also where we get to the interesting part of this report. What metric does
PricewaterhouseCooper rely upon as the basis for its economic projection? It
uses an economic term called “purchasing power parity”. It is the total
purchasing power of that population.
argues that this produces a clearer picture of actual economic strength because
it cancels out price differentials between economies. In general, prices are much
higher in Western economies than in the Emerging Market countries (and even
BRICS nations), thus having higher
amounts of wealth circulating in Western economies can be deceiving, since it
can buy less stuff.
makes this metric and report so interesting is that PWC is essentially
the real wealth levels of these
. This projection is about a lot more than just evening out
GDP is more than four times as much as that of Egypt, and more than five times
as much as that of Pakistan. Even by 2050; PWC estimates that Canada will still
have GDP greater than either nation. But Egypt and Pakistan will have stronger
economies, because their populations will have more real wealth circulating in
not dealing with a small differential here. Note that PWC is talking about
Egypt and Pakistan having much stronger economies than Canada. By 2050,
measured in purchasing power parity, both Egypt and Pakistan will have
than 1/3 stronger
seems to be incongruous. If Canada will still have the
larger economy by 2050 (as measured in GDP), why will Egypt and
Pakistan both have
economies, as measured in the real wealth circulating within that economy? We
get a large clue by looking at a chart which is familiar to regular readers.
the past 8+ years; the bankers of the Federal Reserve and the bankers of Wall
Street have been boasting about all the
has been created in the United States during the
. Yes, lots and lots of wealth.
readers know that B.S. Bernanke conjured more than $3 trillion of new U.S.
funny-money into existence during the infamous
, quintupling the entire
U.S. money supply in less than five years
. And every, single dollar was
handed to the Big Banks of Wall Street – for free. But that’s just the tip of
to the magic of “fractional-reserve banking”, where U.S. banks are allowed to
lend $35 for every $1 they receive. The $3+ trillion which B.S. Bernanke handed
to them became
well over $100 trillion
in new liquidity
. That works out to more than $300,000 per American.
why are there roughly 50 million
Americans? Why are more than 40 million forced to rely upon
food stamps to survive? Because when the bankers conjured their $100+ trillion
into existence (for free), they kept it all – kept it all for
, the oligarchs. What did the oligarchs do with that extra $100+ trillion?
the chart above clearly shows, the oligarchs stuffed most of that $100+
trillion into their own hoards, spending virtually nothing. Of course that’s
not entirely true either. They gambled with much of their funny money, in the
bankers’ private, unregulated, rigged casino – the derivatives market. The
derivatives market is a hoard of private wealth which never circulates in the
real economy that is somewhere in the magnitude of $1.5 quadrillion ($1,500
no longer sure how large the
has swollen, since in 2010 the bankers changed their
“definition” of the casino, and overnight the derivatives market (supposedly)
shrunk by 50%. This financial cesspool is the most gigantic repository of dark pool
liquidity the world has ever seen.
gambling done in the derivatives market is used to manipulate the real economy,
but none of the “wealth” in that rigged casino ever circulates within the real
economy. The chart above, the heartbeat of the U.S. economy, shows what happens
when most of the wealth/liquidity in an economy is hoarded: the economy withers
holiday sales at Macy's and Kohl's cast gloom over sector
the U.S. mainstream media were presenting their usual “visions of sugar plums”
(i.e. lies) about the U.S. economy before Christmas, they couldn’t hide the
the bottom line.
strength around Thanksgiving and Christmas was insufficient to offset the sales
weakness in the balance of the quarter," Stifel, Nicolaus & Co analyst
Richard Jaffe wrote.
addition, these peak selling periods were characterized by greater promotions
which contributed to weaker than anticipated gross margin as well," he
said in a client note.
The only way that the U.S. retail sector was able to sell significant
quantities of goods to consumers with near-empty wallets (and maxed-out credit
cards) was by slashing prices to the bone – leaving little-to-nothing in
profit. Does that sound like an economy that has been “recovering” for more
than eight years? Does that sound like an economy literally overflowing with
newly-conjured wealth? Hardly.
will Canada have a larger economy than either Egypt or Pakistan by 2050, while
having a weaker economy than both? Because as with the United States (and the
rest of the Corrupt West), most of that wealth will be hoarded – hoarded by
does “sharing the wealth” automatically make an economy stronger? It’s not
socialism, it’s simple economics. Just
IMF study finds inequality
is damaging to economic growth
would like to
pretend that they are
just learning this now, just learning that “trickle-down economics” was nothing
more than the pablum fed by the oligarchs to their right-wing foot soldiers –
and the charlatan economists who preached it. In reality, the fact that wealth
equality is the foundation of economic strength is one of humanity’s oldest
An imbalance between rich and
poor is the oldest and most fatal ailment of all Republics.
Plutarch (46 – 119)
this noted philosopher, nearly 2,000 years ago it was already old news that the
fastest way to kill an economy was to let the rich people hoard all the wealth.
And what have we learned in 2,000 years? As PricewaterhouseCoopers shows us,
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.