Many people are advocating interest rates need or should go lower. Unfortunately, the concept that a rising tide floats all boats or trickle-down economics tends to heavily favor the rich. This fuels inequality but other problems also exist.

Currently, much of the recent economic data indicates lower-interest rates have been a "one-time" economic tailwind that is rapidly weakening and lost its kick. This puts both the central banks and the economy between a rock and a hard place. More on this subject in the article below.

Comments (2)
No. 1-2
Sechel
Sechel

The United States pretends to be a free market economy and yet we insist on fixing the cost of money which is the rate of interest

Curious-Cat
Curious-Cat

In all the writings about US and world economic problems there is one major factor seldom mentioned: to wit that the population is not growing as it did post WWII. In order for economies to grow they need an increase in population (or an increase in productivity). We are in a condition where our "consumer population" (ages 15-64) is beginning to decline. Here are some disturbing statistics.

  1. The US fertility rate has been below the population replacement rate since 1971. Our population continues to increase because of two factors: 1. People are living longer, and 2. Immigration. Both of those categories are not huge consumers.

  2. The population growth rate problem is not only a US problem. Everyone knows about China and Japan. But it also affects Europe and virtually every other area except Africa and India. Here is an animated map that clearly shows how the populations are aging. https://www.visualcapitalist.com/animation-rapidly-aging-western-world/

  3. Solutions to replacement populations are problematic. Germany wanted immigrants to serve as workers and has been flooded with middle eastern immigrants who brought their culture with them. Their culture does not please the traditional European cultures. (One politician said, "We wanted workers, but instead we got people.")

  4. Chris Hamilton is one of the few economy bloggers who seems to have a firm grasp on this situation. See https://econimica.blogspot.com/2016/06/why-this-time-is-completely-utterly.html

  5. The US is working actively to curtail immigration which will exacerbate our population problem.

How to deal constructively with this problem? I have absolutely no idea. However, as populations age and dwindle there will be a natural decline in the market for houses and household goods as well as cars and education. Healthcare will probably do well for a while because old people get sick. But the next quarter century, if the statistics in those web sites are accurate, will mean a decline world-wide in traditional manufacturing.

But then as Dennis Miller used to say, "I could be wrong."