The risk with unabsorbed excess savings is that they may be invested in “bubble assets”

At equilibrium, the stock of private sector savings is equal to the sum of corporate capital, public debt and the value of “bubble assets” (for example real estate). If savings increase, the normal dynamics is that the real interest rate then falls and the stock of capital increases; if this is no longer possible (because the nominal interest rate has become zero) or if the government wants to prevent overcapitalisation of the economy, the public debt may increase. If the real interest rate can fall no further and if the government can no longer or no longer wants to increase the public debt, then savings will inevitably be invested in bubble assets, driving up the prices of these assets. This rise in the prices of bubble assets can prevent overcapitalisation of the economy and excessive public debt.