I was reading Fisher today and must admit, he's one of the few that has come to his senses, in regards to long term negative effects of a low interest rate environment on the economy.
This specifically caught my attention, which you touched on a while ago:
Let me move now to the second major development on my list. In addition to its effects on labor force growth, the aging of the population is likely to boost aggregate household saving. This increase is because the ranks of those approaching retirement in the United States (and in other advanced economies) are growing, and that group typically has above-average saving rates.9 One recent study by Federal Reserve economists suggests that population aging--through its effects on saving--could be pushing down the longer-run equilibrium federal funds rate relative to its level in the 1980s by as much as 75 basis points.10
In addition to slower growth and demographic changes, a third factor that may be pushing down interest rates in the United States is weak investment. Analysis with the FRB/US model suggests that, given how low interest rates have been in recent years, investment should have been considerably higher in the past couple of years. According to the model, this shortfall in investment has depressed the long-run equilibrium federal funds rate by about 60 basis points.
It looks like the sprit of Frederic Bastiat was haunting him today, reminding him of opportunity cost.
