Such is the “New New Normal.” 

The New-New Normal

The structural transformation over this past year and the last decade has permanently changed the economy’s financial underpinnings as a whole. Such would suggest the current state of slow economic growth is the new normal. As such, interest rates will remain stuck near the zero-bound as we continue to struggle with the myriad of problems plaguing growth.

• A low savings rate for 80% of Americans
• An aging demographic
• A heavily indebted economy
• A decline in exports
• Slowing domestic economic growth rates.
• An underemployed younger demographic.
• An inelastic supply-demand curve
• Weak industrial production
• Dependence on productivity increases

The lynchpin remains demographics and interest rates. As the aging population grows, they will become a net drag on “savings.” Such increases the dependency on the “social welfare net,” which will continue to expand over time.

“Demography, however, is destiny for entitlements, so arithmetic will do the meddling.” – George Will

The end game of three decades of excess is upon us, and we can’t deny the weight of the debt imbalances currently in play. The medicine the Federal Reserve is prescribing is a treatment for the common cold; in this case, a typical business cycle recession.

The outcome of those policies, while unintended, is destroying the bottom 90% of the population who suffer from “debt cancer.” Trying to solve a debt problem with more debt is akin to giving a patient “aspirin” for the pain. While such a prescription may temporarily mask the “pain,” it is not a “cure.”

If it were, then a rising percentage of Americans would not be supporting the idea of “socialism?”

But that is what we face in the “New New Normal.”