Population aging and debt

In many countries the private sector is a net creditor while the public sector is a net debtor. Population aging increases the supply of net credit by the private sector because retirees or those approaching retirement accumulate more wealth, including net credit. Population aging leads to rising public debt as public spending on seniors increases more rapidly than taxes paid mostly by those of working ages. A priori we cannot say whether the supply of net private credit will outstrip the demand for net public debt, but rapidly aging Asian countries will likely experience imbalances as the cost of robust publicly funded programs for seniors increases. For those countries, net public debt may grow much more rapidly than net private credit. The result will be declining public support for seniors, higher taxes on working-age adults, net private debt crowding out capital, or some combination of the three.