As the late, great paleontologist Stephen J. Gould explained, the fossil record shows little, if any, “gradual change” in living organisms over time. Instead, organisms remain essentially unchanged for eons and then, in the geological blink of an eye, they are replaced by a totally new set of radically different organisms. Gould’s term for this pattern of long-term stability followed by sudden change is “punctuated equilibrium.”

As history shows, punctuated equilibrium is a useful concept not only for describing the history of life but also for describing economic behavior. Periodically, we witness game-changing economic disruptions, followed by relatively long periods of stable, consistent growth. In the past century, these disruptions included World War I, the Great Depression, World War II, the malaise and oil shocks of the ‘70s, and now, what history is likely to remember as “The Great Recession of the Early 21 Century”

From such crises, the world emerges with a new set of rules that determine which asset classes will make the most money and — together with demography, psychology, and technology — which industries and economies will triumph.

The “new normal” is a term often applied to the set of baseline assumptions that we use to describe the economic climate in the period of stability after each disruption. It describes the configuration of global markets, competitors, and forces that will define how “business as usual” is done, until the next game-changing crisis.

Before we examine what our “new normal” will look like, let’s take a moment to understand the “old normal” and some of the key assumptions that drove it.

In the early 1980s, the global economy shifted from inflation to deflation, and deflation has dominated for the past 25+ years. This relentless deflation has been driven by dramatic improvements in productivity that were, in turn, driven primarily by information technology and globalization. The ability of instant communications to span the globe and create far more efficient value chains completely changed the constraints on productivity, while new technologies revolutionized the relationship between work, the workplace, and the very concept of geography itself. ...