Socioeconomic Consequences of the New Abnormal

If ZIP lasts indefinitely, Generation X and Millennials will be worse off in retirement than their parents. Since Japan has had the longest experience of ZIP, we use data from the Survey of Household Income and Expenditure in Japan to show that pensioners in 2019 had 20 percent less pension income than their counterparts in 1999. The New Abnormal is inequitable from an intergenerational perspective because future generations bear the burden of public debt. It is less clear whether the New Abnormal is inequitable from an intragenerational perspective. ZIP directly increases house prices because housing is a capital asset whose return is correlated with the yield on long-term bonds. Since these yields have decreased because of ZIP by about 3 percentage points, ZIP increased real house prices by about 25 percent. ZIP increased the price of insurance because insurance companies invest their premium income in liquid assets, which have little or no return.