[...] the notion of a ‘savings glut’, put forward in 2004 by Ben Bernanke when he was still chair of the Federal Reserve. In a savings glut, desired saving exceeds desired investment, making for an overabundance of capital for which there is no use. Why something like this should have come about remains in dispute. An interesting theory claims that excess capital is due to both technological and demographic causes taking effect simultaneously: technological, as today’s advanced methods of production require less and less lumpy physical capital, and demographic, as people live longer and therefore must save more for their old age. While technological change lowers the demand for capital, demographic change increases its supply. Low or even negative interest rates are therefore primarily reflections of market conditions, not the result of central bank monetary policies – the latter essentially just follow and mirror the former. The practical implication is that in order to revive growth, governments should rely on fiscal rather than monetary stimulus, absorbing the surplus capital by borrowing – which is so cheap in a ‘savings glut’ that borrowing practically pays for itself. Growth and employment are then brought back by substituting public for private demand.