As populations age, the base of taxpayers to support them must grow in proportion, or otherwise face huge obstacles to meet obligations. Unfortunately for most developed countries, this will not be the case and as a result already over indebted governments will need to incur more debt to pay for increased social obligations. We are at the early stages of this aging society process, so the problem will only get worse.
The above chart demonstrates the phenomenon of an aging population in Japan since the 1960s. Through the years as the population has aged, and birth rates have failed to keep up, the balance of older citizens to youth is becoming increasingly top heavy. Having fewer workers to support the aging Japanese population has had serious implications for Japans debt load, which has increased from just 70% of GDP in the early 1990s to 245% today, the world’s highest debt/GDP ratio.
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