Why can’t we simply adjust to a smaller GDP if the population actually declines? Why can’t we adjust to a slow growth economy if the population is growing slowly?
We have a system of ever increasing debt incentive by ever lower interest rates to promote growth. The flaw is that this model requires infinite growth. At zero interest rate policy it seems the model has broken down at the same time as population growth has slowed.
If things really break down such that we go into a phase of deleveraging, stocks and real estate will get nailed.