The number one factor pointing towards a long period of economic stagnation is the one factor that cannot be altered by the government or obscured with monetary manipulation- it's population demographics.
The peak spending years of the baby boomers are over. The generation following them cannot fill their shoes as spenders. Not only that, but the baby boomers are transforming from spenders into savers more rapidly, as they come to recognize that Social Security is becoming insolvent faster than predicted, and as they recognize that pension funds are either underfunded or holding bad investments. They will drain buy money out of the stock market to maintain their accustomed standard of living.
All the very bad deficit projections for the next 4-6 years are not bad enough. Bond yields will soar and that will be that. We will miss the days of $1.6 trillion annual deficits then. We are entering a perfect storm. These cycles cannot be broken.
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