One of the big failures of global monetary policy has been the post-2008 trend towards near-zero interest rates, and now, even negative interest rates. They have delivered little in terms of growth.

The logic of ZIRP (zero interest rate policy) pursued by most major western central banks is simple: make credit so cheap that more money is borrowed and invested, thus reviving growth. But barring the US and UK, this policy has not delivered – in Europe or Japan. Now, with Brexit, Britain’s impending exit from the European Union, both Britain and the US too may delay raising interest rates. So ZIRP rules, more or less,

The question is: why has eight years of ZIRP yielded a mouse?

The answer may partly lie in demographics. Most of the countries where ZIRP is failing have a population age structure that is skewed towards the old. When the proportion of the old grows in a population, savings and consumption trends change radically.

Ask yourself: if you are a retired person, and you depend on earnings on investment to meet your expenses, will you save more or spend more if returns on investment turn negative? If your nest-egg is going to earn zilch, it means you have to eat into your capital to spend. So logically you will spend less.

Some 33 percent of Japanese are over 60 years old, and 26 percent above 65. And with the Bank of Japan running ZIRP or negative rates, both household savings and consumption are weak.

Not only that, the drop in consumption forced an increase in corporate savings, as companies stopped investing and saved more themselves. As FT Alphaville wrote in December last year, “businesses have less need to spend on capex when the outlook for sales growth in bleak. An aging, much less shrinking, population reduces household savings and household spending. In America, people aged 75 and older spend about half what those aged 35-54 spend.”

When corporate savings grow due to a reduction in investment, how will growth happen?

Apart from the Bank of Japan, the European Central Bank, Sweden, Denmark, and Switzerland have already moved to negative rates. German bonds have sometimes touched yields that were negative.

Now consider the demographics: Germany, 21.1 percent above 65, Italy (21 percent), Sweden (19.8 percent), Denmark (18.4 percent), France (18.3 percent), Switzerland (17.5 percent). And the UK? 17.5 percent.

So ZIRP is not necessarily a panacea for restoring growth as originally thought, thanks to the demography of the countries trying this medicine.

A more psychic reason for many rich countries being immune to monetary therapy is this possibility: could it be that when a population reaches a certain level of prosperity, its commitment to work hard and aspire to grow comes down?