In the Fiscal Times today, at http://www.thefiscaltimes.com/... Eric Schurenberg writes about the new normal and how it may be more dismal for financial, political and demographic reasons than other historial recoveries. My response is under the fold.
The problem with the economy is more distribution than accumulation. Once distribution is worked out, accumulation will return to something akin to normal. Our wounds are mostly self-inflicted. We believed analysts with ties to brokerage houses when they said that pensions must be fully funded, ignoring the fact that these analysts were interested parties. Greater employee-ownership of stocks will take them out of the speculative market and convert them into a pension allocation instrument.
Population valleys are very easily ameliorated - simply give families with more children more money and families without children less money. That would also solve the perverse incentive to fire productive workers at middle age - since their wage rate absent payments for dependents would be competitive - especially if their longevity compensation is in stock dividends and not in salary.
While many billionaires have lost money - much of it was paper wealth anyway. In distributional terms, the Koch, Wall, Gates and Buffett fortunes are still quite secure. Demanding more of these families and those like them in order to reduce and eventually eliminate the national debate won't crash the economy - just the opposite - and movements toward employee ownership won't make these families broke - however it will decouple great wealth from industrial power. That would not be bad if it became the "New Normal."