If money and public sector bonds become perfectly substitutable, the potential for investment in risky bonds, equities and real estate will be considerable

If long-term bond yields become close to zero, and if the risk that they will move in the future becomes low, money and public-sector bonds will become highly substitutable. This means that savers in OECD countries hold a considerable quantity of monetary or equivalent assets (bonds yielding zero for a long time to come), and therefore that the weight of money in their portfolios has become massively excessive. The potential for reinvesting money and money-equivalent bonds in other asset classes (risky bonds, equities, real estate) is therefore considerable, and so is the potential rise in the prices of these other asset classes.