When former US Treasury secretary Lawrence Summers delivered his  famous address on the return of secular stagnation at the IMF in 2013, he revived interest in a Keynesian construct that had fallen into disuse since the 1940s. He argued that a chronic excess of savings, relative to capital investment, may be developing in the global economy, forcing long-term interest rates down and threatening a persistent shortage of demand.

Since 2013, there have been brief periods of strong output growth in the large economies, suggesting that the risks of secular stagnation were abating. But these cyclical upswings proved temporary and the trend decline in global long-term interest rates towards zero was never ended.

On top of these deflationary trends, the Covid-19 lockdowns have caused a seismic shock in all the big economies. In a recent Princeton Bendheim webinar, Mr Summers argues that this will trigger structural responses from households and businesses that will strengthen the forces of stagnation. If he is right, the consequences for macroeconomic policymakers and asset managers will be profound.