One of the many issues confronting the global economy is that the savings glut in the advanced economies as households deleverage. The glut is now so large that it has sparked a deficiency in aggregate demand. This is resulting in two key effects. Not only is advanced economy growth lower as slowing household spending growth crimps business investment, but the seven-year investment surge in the emerging market (to boost industry capacity) is facing low rates of return and chronic excess capacity. This has culminated in sustained corporate deflation and higher non-performing loans for banks. Given this backdrop, some believe that policy stimulus is exhausted because rates have been cut to zero. However, central banks may simply have to use more unconventional policy, with negative interest rates already having gone from a theory to a reality in Japan and Europe in an effort to boost export performance, although this seems to have sparked more volatility and is unlikely to have any positive growth effect. (VIEW LINK)