Comments on: Bubbles and demographics: Is China following Japan and the US? http://www.eastasiaforum.org/2009/06/22/bubbles-and-demographics-is-china-following-japan-and-the-us/ Economics, Politics and Public Policy in East Asia and the Pacific Mon, 13 Feb 2012 06:23:14 +0000 hourly 1 http://wordpress.org/?v=3.2 By: Lincoln Funghttp://www.eastasiaforum.org/2009/06/22/bubbles-and-demographics-is-china-following-japan-and-the-us/comment-page-1/#comment-36296 Lincoln Fung Sun, 21 Jun 2009 23:57:59 +0000 http://www.eastasiaforum.org/?p=5226#comment-36296 Kazumasa Iwata's observation of the relationship between population aging and long term interest rates is interesting and its implications far reaching. If this relationship holds into the future, say true for China's impending population aging, public policies in China must make sure that the expected lowering long term interest rate and the likely increased savings as a result or response by people be channelled into productive capacities or assets. This is also the lesson learnt from the US assets bubbles and the role long term interest rates and saving and investment imbalance played in that process, as Chairman Bernanke has admitted. Hope new financial regulations to be introduced worldwide will provide policy makers with tools to deal with the future financial challenges and the population aging challenges. Kazumasa Iwata’s observation of the relationship between population aging and long term interest rates is interesting and its implications far reaching.

If this relationship holds into the future, say true for China’s impending population aging, public policies in China must make sure that the expected lowering long term interest rate and the likely increased savings as a result or response by people be channelled into productive capacities or assets. This is also the lesson learnt from the US assets bubbles and the role long term interest rates and saving and investment imbalance played in that process, as Chairman Bernanke has admitted.

Hope new financial regulations to be introduced worldwide will provide policy makers with tools to deal with the future financial challenges and the population aging challenges.

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