Regulatory changes have increased the cost to banks of intermediation, and hence liquidity provision, in many markets, and particularly the bond market. This has seen a number of participants withdraw completely and others scale back their activities. Bond desks at banks hold less inventory than they have done historically, given the increased cost of doing so.
What all these economic points imply is that an economy that has a surplus can adopt macroeconomic policies to increase domestic demand, either by income policy or by using its fiscal space to cut taxes or increase expenditure, while still keeping the basic macroeconomic equilibrium of not spending more than what it produces.