Japanese Asset Price Bubble

In this episode, we explore the dramatic rise and fall of Japan’s asset price bubble, a period between 1986 and 1991 when soaring real estate and stock prices pushed the economy to extraordinary—and unsustainable—heights. Fueled by the aftermath of the Plaza Accord, aggressive monetary easing, and sweeping financial deregulation, speculation spiraled out of control, with Tokyo land values reaching levels that symbolized the peak of economic excess. We break down how loose credit and surging investor optimism inflated the bubble, why the Bank of Japan’s eventual interest rate hikes triggered its collapse, and how the crash unleashed a wave of non-performing loans and a banking crisis. The episode also examines how the bubble’s burst gave way to Japan’s “Lost Decades” of stagnation and deflation, reshaping corporate culture, weakening consumer confidence, and leaving a lasting imprint on the nation’s economy and society.