While demographic shifts are mathematically predictable, their economic and social consequences are not. Every actuarial forecast the retirement of the baby boomers during this decade. The Congressional Budget Office bemoaned for years falling ratios of workers to retirees (1960: 5-to-1, 1985: 3.3-to-1, 2030: 2-to-1), yet it was the unexceptionally dramatic 2008 recession that pushed the U.S. into its own demographically-driven liquidity trap.

This major shift, which began earlier this decade, will not level off until 2030. There will be growth headwind driven by demographics for the next 15 years. Whatever technological innovations, productivity gains, or increased youth energy the US sees will be countered by a radical restructuring of our society as the country ages:

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The increase of Americans over the age of 65 from 12% to 22% of our population acts like a giant economic vacuum, sucking up growth generated elsewhere. Retirees work less, consume less, and produce less. Our economy faces an uphill struggle as we climb this curve to a new older society.

For many investment or real estate professionals, the current low interest rate environment feels unnatural. Most successful US businessmen who built their careers over the last 30 years experienced average interest rates well above 6%.

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The financial community is waiting with bated breath for a reversion to the mean. People are a product of their experiences and intuition tells them that interest rates will rise again.

At every investment or real estate conference I attend, I hear people say, "Interest rates have to go up." At the beginning of each year, economists forecast rising interest rates. Yet, each year journalists and investment professionals are shocked to find they remain low… and even go down.
Demographics are destiny. As long as the US, Western Europe, and nearly every other developed nation is aging—reshaping the fundamental composition of our society—interest rates will remain inordinately, mind-bogglingly low.