Lotus Eater macro

The question was what happens in macroeconomies as consumption approaches satiation.  Here's Bryan Caplan's answer:

…as consumption approaches satiation, workers reduce their hours of work to prevent themselves from actually reaching
satiation.  More technically, as workers approach satiation, their
labor supply curves start to "bend backwards."  The result is that
rising labor demand stemming from rising productivity raises wages yet
reduces employment.

A longer statement of the question is here and I believe it is fair to assume people still are not satiated in leisure and thus they will work less.  Does productivity have to be rising (rather than just high) in this scenario?  And isn't MU-weighted labor productivity probably falling?

My other query is whether the real interest rate approaches infinity.  Can the resulting incentives for capital consumption keep the economy away from virtual satiation altogether?  A trickier question is what is optimal monetary policy in such a setting.  Can you figure it out?


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