So dev's have already said in the tech support forums, (before balance forums were deleted) that they were working on the economy.
The issues subtract too much prosperity. And when your prosperity is too low it constantly creates new issues which leaves most cities and castles after about 2 years in-game to have ridiculously low prosperity from both the issues and constant village raids.
You basically have 4 options:
1. make 7 caravans like the guy on page 1 of this thread. Start them in different geographic locations so they're not competing with each other.
2. slave away on defending your villages and castles from all raids and constantly doing all "negative" issues (not all issues give negative prosperity) until your city hits the 4,000+ prosperity range or your castle hits the 1,000+ prosperity range, at which point the issue spawn rate seems to drop dramatically
3. exploit smithing till they fix it
4. enable the console commands "cheats" and simply fix the prosperity on cities and castles. At 3,000 prosperity most cities have reduced issue rates and are reasonable to keep growing, At 4,000 to 7,000 prosperity cities seem to prosper extra fast with very few issues. However at 7,000 prosperity you basically cap out as your villagers eat most of the food, and your garrison eats the rest. Don't console command castles to over 1,200 prosperity or all of your food will go to supporting villagers and your garrison will starve.
Personally, I just console command all my cities to 4,000 prosperity, and castles to 1,000 prosperity, ONCE. Then it's up to me whether they grow or die from that point. When you get a castle with 150 prosperity or a city with 1,300 prosperity you'll understand why. They can't even support a 50 troop garrison at that point. My first few playthroughs I tried to do all the nursing of my settlements back to health myself. But then I literally spent 100% of my time defending my villages from raids while constantly trying to do issues from notables between raids. I spent about 2-3 years in-game nursing every settlement I got back to health so that I could actually go to war and not defend. Then a new patch would come out and I had to start over...