The Hidden Cost of Fake Money: Why Birth Rates Are Collapsing
What if birth rates are collapsing not because we're too rich, but because our monetary system is telling us we're poor?
Living organisms expand when resources are abundant and contract when they are scarce. Humanity is a living organism, money is an information system it uses to gather information about available resources.
Consider Type 2 Diabetes as a parallel: it occurs when the body's insulin signaling system breaks down, causing cells to believe they're starving even while swimming in glucose. Our monetary system may be creating a similar dysfunction at a societal level – false signals of scarcity amid apparent abundance.
Correlation alone doesn't prove causation, but the persistence of this pattern across different cultures and eras suggests a deeper link.
As currency loses its reliability, essential goods like housing and education become disproportionately expensive relative to wages. Families respond by delaying or reducing childbirth, mirroring cells that misread insulin levels and behave as if scarce resources must be conserved.
The usual explanation never made sense to me: societies supposedly have fewer kids as they get richer. Yet history shows the opposite pattern. The Roman aristocrats maintained large families despite their immense wealth. America's post-war generation - the wealthiest ever - achieved record fertility rates. Today's wealthy have even fewer children than average, which this framework explains: wealthy individuals are more exposed to monetary signals through their greater engagement with financial markets.
"Women's education and careers reduce fertility," goes another theory. Yet the Soviet Union combined high female education and workforce participation with strong fertility rates. Saudi Arabia saw massive increases in women's education while maintaining high birth rates until the late 1990s.
"It's urbanization and modern living," others claim. Yet historical London and Paris maintained high fertility throughout their urban growth. Today's megacities in developing nations often have higher birth rates than wealthy countries - the opposite of what the urbanization theory predicts.
A real explanation must work across time and place. These theories don't - but monetary systems might.
The Economic Divergence
When we overlay the expansion of the monetary base against fertility rates from 1959 to 2020, two distinct trends emerge that tell a story of systemic change. As the monetary base expanded—accelerating rapidly after the severance from the gold standard—fertility rates began a structural decline, falling from 3.7 to 1.6 children per woman.
While correlation is not causation, and many social factors contribute to birth rates, the economic signal is difficult to ignore. As the supply of money decoupled from real resources, the cost of the most resource-intensive “project” a human can undertake—raising a family—skyrocketed relative to wages. The expansion of the money supply didn’t create abundance for families; it created asset inflation that moved the goalposts for young parents. Simultaneously, bureaucratic complexity (measured by the growth of federal regulations) expanded, mirroring the biological response of an organism trying to manage a dysregulated system.
The Diabetic Society
In diabetes, repeated insulin spikes create a cycle of inflammation that blunts cells’ ability to sense glucose. In our economy, monetary expansion works similarly. When money is printed, it doesn’t flow evenly; it flows into assets first.
Look at housing: monetary expansion inflates asset prices, making homes “unaffordable.” The bureaucratic response? Rent control, zoning laws, and housing subsidies. Home prices have risen dramatically compared to incomes not because houses got better, but because the measurement system (money) got corrupted.
Families respond to this false signal of scarcity just as cells respond to insulin resistance: they conserve resources. In biological terms, this means metabolizing less energy. In sociological terms, it means reproducing less. The high cost of living is the economic equivalent of cellular starvation amidst plenty.
Historical Parallels
The Late Roman Empire offers a haunting parallel. While we lack the granular data of the modern era, historical records indicate a synchronization between the debasement of the Denarius and the collapse of elite family structures.
As Rome progressively reduced the silver content of its coinage to fund imperial expansion and bureaucracy, the cost of maintaining social status skyrocketed. Historical sources, such as the legal reforms of Augustus, reveal a state desperate to reverse a precipitous drop in fertility among the aristocracy. The state attempted to fix this not by restoring sound money, but through the ius trium liberorum, a suite of laws granting special privileges to parents of three or more children.
It didn’t work then, and similar subsidies aren’t working now. The bureaucratic response (more laws, more complexity) mirrored the defensive inflammation of a sick body, but it failed to address the root cause: the signal carrying the economic energy had lost its integrity.
Modern Acceleration
The main difference between Rome and our era is speed. While Rome’s cycle played out over centuries, we are witnessing these effects in decades. Furthermore, unlike Rome’s localized debasement, today’s fiat monetary system is global.
As major economies simultaneously moved away from sound money backed by precious metals toward pure fiat currencies, birth rates collapsed across the developed world. The transmission mechanism appears to be the same everywhere: monetary expansion leads to asset inflation, which creates a “cost of living” crisis that signals scarcity to young families. Global fertility trends look suspiciously like the inverse of global liquidity trends. Modern financial markets allow these false signals to propagate instantly, convincing an entire generation that despite our technological abundance, we are too poor to reproduce.
A Potential Solution
Thankfully, this time around we have new tech. Bitcoin can provide a better foundation for money than precious metals ever could. It's perfectly verifiable, highly liquid, and extremely difficult to confiscate. This means that once Bitcoin is adopted as the foundation of money, the State won't be able to easily force people off it. The question is whether we will adopt it in time, or if the system needs to reset once more before the patch is installed.
Sources
Federal Reserve Bank of St. Louis (FRED) - Monetary Base (M0) data
United Nations World Population Prospects (2024) - US Fertility Rates
Office of the Federal Register - Annual Pages Published
Butcher, Kevin, and Matthew Ponting. (2014). "The Metallurgy of Roman Silver Coinage: From the Reform of Nero to the Reform of Trajan" - Silver content of denarii
Hug, Angela G. (2014). "Fecunditas, Sterilitas, and the Politics of Reproduction at Rome" - Roman fertility data
The Digest of Justinian, Alan Watson (1984) - Administrative complexity data
Interesting theory! But wouldn't the steady growth in productivity negate much of the effect of inflation? In real terms, families have been getting richer over the 20th and 21st century.
Still, there's something to your thesis. Seems like bureaucratic overreach and regulation have led to e.g. the housing shortage, but also plausibly a cultural change in values that could behind the birth rate collapse. I think studying more societies like Korea, which has had a massive fertility collapse, could be instructive.
"The Fed's monetary base (M0) and fertility rates show a strong negative correlation (-0.899, p < 0.001) – the kind of relationship you rarely see in social systems." - this is confounded by "point in time". When you have any two time-dependent variables (e.g. stork population and number of babies over time), and the first one goes down and the second one goes up monotonically over a period of time, you get a correlation of -1^C^C a strong negative correlation, and -1 in case they are both linear -- and get "strong evidence" for the theory that storks bring babies.
For more meaningful evidence, one needs to get data over multiple places at the same time. For a start, do countries in East Asia, with particularly low birth rate, print particularly large amounts of money?