Growth or money: Which mechanism will prevail from 2021?

In the aftermath of the health crisis, OECD countries' economies will be characterised by: Low potential growth, due to the proliferation of zombie firms (whose balance sheets have deteriorated), the decline in productive and human capital and the fact that certain business sectors face long-lasting problems; Extremely abundant liquidity, due to the massive public debt monetisation policies implemented in 2020 and 2021, combined with negative real interest rates. What will happen in financial markets in 2021-2022? The sluggish growth and the deterioration in companies' balance sheets will probably have a negative influence; But the reinvestment of excess money in other asset classes and the negative real interest rates are likely to drive financial markets sharply higher. Which mechanism will prevail? The monetary mechanism will certainly dominate on average, and we will explain why, but there could be high volatility due to the periodic return of uncertainties concerning companies' growth and financial situation .