🧐📚 "The bubble in Japan was sui generis; when that bubble imploded at the beginning of the 1990s, there was a surge in the flow of funds both to China and the various Asian countries and to the United States. The currency values and the asset prices in the countries that were receiving the money from Japan adjusted to an increase in the inflow of foreign savings. When the bubble in stock prices and real estate prices in Bangkok and the other Asian capitals imploded in 1997 and 1998, there was a surge in the flow of funds to New York as the borrowers in these Asian countries sought to reduce their indebtedness. The foreign exchange value of the U.S. dollar and U.S. asset prices increased in response to the increase in the inflow of foreign savings. The money had to go someplace, and the result was that the prices of U.S. stocks reached stratospheric levels. During the 1980s real estate prices in Japan increased by a factor of ten and stock prices by a factor of six or seven; in the second half of the decade Japan experienced an economic boom. The rates of return earned by real estate investors appeared to be about 30% a year. Business firms recognized that the profit rate on real estate investment was substantially higher than the profit rate from making steel or automobiles or TV sets and so they became large investors in real estate using money borrowed from the banks. At the beginning of 1990, the incoming governor of the Bank of Japan instructed the banks to limit the growth in new real estate loans as a share of their total loans. Once the bank loans for real estate began to increase at 5 or 6 percent a year rather than 30 percent a year, some of the firms and investors that needed the cash from new loans to pay the interest on the outstanding loans were no longer able to obtain new loans. They sold real estate and the bubble began to implode." "Manias, Panics, and Crashes" by Kindleberger