In Section 3, I begin by examining the process of balance sheet adjustment after the bursting of a bubble and when the population is ageing, juxtaposing Japan in the 1990s and the United States in the 2000s. Then, I summarize the consequences of severe, prolonged balance sheet adjustment under population ageing.
However, I look at these developments with some unease. Indeed, catching-up dynamics after excessive pessimism up to the summer of 2012 can explain some of the asset price increases. Yet abundant global liquidity in addition to abating risks and improving fundamentals has certainly played a role, too.