The fundamental principles of investment are being upended, perhaps irreversibly, as the world enters an era of ultra-low and even negative interest rates.

What's happening: American consumers have seen the interest rates they're paid on savings accounts, bonds and CDs tumble this year and in places where central banks have actually set negative rates — like Japan and the eurozone — some consumers are actually being forced to pay in order to save money.

Driving the news: The European Central Bank will meet this week to consider lowering its interest rate on deposits, which has stood at -0.4% since 2016.

• Fearing that negative interest rates will soon mean average customers have to pay to keep money in banks, financial authorities from Germany, Denmark and Norway are independently speaking out against them.
• “In the long run, negative rates ruin the financial system,” Deutsche Bank CEO Christian Sewing said at a conference last week, according to Bloomberg.
• While the goal is to spur people to spend or take financial risk rather than save, the policies haven't worked. Plus, new data shows that negative rates may be doing more harm than good.

The Federal Reserve is gearing up to cut interest rates for the second time this year when it meets later this month, and banks are already cutting rates on savings accounts.

• Former Fed Chair Alan Greenspan said last week that it’s "only a matter of time" before negative rates come to the U.S.

The big picture: The low-to-negative interest rate environment poses a major problem for people looking to save for retirement.

• The traditional 60/40 portfolio (60% stocks and 40% bonds) that fund managers have used to craft retirement accounts for decades doesn't work in the long term if bonds yield nothing or have negative rates.

"Young people ... are going to have to substantially increase their contributions" to retirement accounts if they hope to actually retire one day, Alicia Munnell, director of the Center for Retirement Research at Boston College, tells Axios.

• Future retirees will also likely have to put more of their funds into stocks and other assets that are riskier and more likely to result in a loss of principal — meaning retirement assets will be less secure.

Between the lines: U.S. public pension and retirement funds are currently underfunded by trillions of dollars. And, states are already in a position where they’re either going to have to raise taxes or cut benefits for future retirees — or both, notes Jeffrey Hooke, a finance professor at Johns Hopkins University.

• Negative interest rates will likely worsen that problem, forcing state governments to make some "tough decisions."
• “Retirees, most of them think they’ll always get their money, but it may be the case in 5-10 years that some of them don’t,” Hooke tells Axios.
• “It won’t be pleasant, but it may be necessary."

The bottom line: A fundamental element of our entire economic system — saving earns money and borrowing costs money — is being unhinged before our eyes.

The New York Fed’s monthly survey showed Americans' expectations of inflation over the next year dropped to the lowest since the survey was launched in 2013.

• Expectations for inflation over the next 3 years also fell, nearing an all-time low.

The big picture: Fed Chair Jerome Powell cited weak inflation as one of the concerns that motivated the central bank to cut interest rates in July for the first time in more than a decade. Despite strong retail sales and jobs growth numbers, inflation has been stubbornly below the Fed's 2% target.

American consumers loaded up on debt in July at the fastest pace since late 2017, the Fed's consumer borrowing report found, driven by a big jump in credit card use.

• Borrowing rose by just over $23 billion in July after a $14 billion increase in June, the data shows, increasing the total outstanding debt to more than $4 trillion.
• July's debt increase was the largest monthly gain since a nearly $30 billion jump in November 2017.
• Credit card borrowing rose by $10 billion in July after falling by $186 million in June.

Two separate surveys released on Monday showed an increase in the percentage of Americans worried about losing their jobs.

The surveys follow a worrisome trend in corporate downsizing that has been playing out for much of the year and that picked up in August.

Details:

• The New York Fed's consumer credit report found worries about losing a job over the next year increased for the second month in a row to an average 14.2% in August from 13.8% in July. Respondents also said they expect their earnings to grow more slowly over the next year.
• Fannie Mae's Housing Purchase Sentiment Index also showed the number of Americans concerned about losing their job increased and the net share of Americans who say they are not concerned about losing their job over the next 12 months dropped 4 percentage points.

Yes, but: The increases were minor, with both the NY Fed and Fannie Mae job loss expectation numbers falling well within the typical range of responses over the past few years.

But, but, but: U.S. companies did ramp up the pace of job cuts last month, data from Challenger, Gray & Christmas shows, with firms announcing plans to axe 53,480 jobs. That a 38% increase from July’s total.

• Job cuts have been higher every month this year than the corresponding months in 2018, and last month’s job cuts were the highest August total since 2009, per the report.
• A separate Challenger report found that through July, companies have announced 42,937 job cuts due to bankruptcy — 40% higher than the number announced for this reason through July 2018 and 19% higher than the number of bankruptcy-related job cuts announced through all of 2018.

Axios' Rebecca Falconer writes: The federal deficit exceeded $1 trillion in the first 11 months of fiscal 2019, the Congressional Budget Office said in a report published Monday.

The big picture: The deficit is $168 billion more than the same period in the previous fiscal year.

• The growing deficit has been driven by mandatory spending in areas like Social Security and Medicare, President Trump's tax cuts, and bipartisan agreements to increase spending in areas such as defense — all of which contributed toward the overall 7% increase in federal government spending.

Between the lines: Per Axios CEO Jim VandeHei, Trump "promised in a 2016 interview, with the WashPost's Bob Woodward and Robert Costa, to wipe out the national debt in 8 years. Instead, he's increased the deficit and inflated the debt by trillions."