September 2019 - Fall is here and so is more uncertainty

As the summer has faded into fall, the outlook for the economy remains as murky as ever. Economic uncertainty abounds around the globe as we move through September 2019.

Negative interest rates are the reality in much of the world and there has even been talk that rates could soon turn negative even in the United States.

Former Fed chairman Alan Greenspan gave an interview recently, in which he theorized something quite interesting that may explain one of the main drivers behind negative rates – the aging world population. Mr. Greenspan also indicated that the negative rates are probably an eventuality in our own home country.

I have thought for a while that overpopulation is behind most of the larger world issues. The fact is that there are more people alive today on planet earth than the sum of all people who have ever died during the brief history of mankind. The fact is that we have never had even close to this many human beings in the world, and we are all living longer. Of course, this is more true than ever in the largest countries and largest economies in the world.

The populations of Japan, Germany, China, Great Britain and the United States are getting older. We are living longer than ever and most of us are planning to live longer. Therefore, we must plan financially as if we are going to live longer. In fact, this may be one of the primary reasons that there is more and more money flowing into perceived “safe” investments like government bonds, which of course drives down interest rates. Food for thought but suffice to say, it is looking like rates are going to remain low for the foreseeable future and they may eventually turn more and more negative, even in the U.S.