Deflation and Japanese experience--asset bubbles

"Although history never exactly repeats itself, I believe there are strong similarities about what happened in Japan and what could lay ahead for the United States. Driven by years of easy credit during the 1980s, the Japanese stock and housing market became a bubble - and everything changed when the bubble burst in 1990.

"One of the first lessons learned - or relearned, actually - is that when asset bubbles burst, there is nothing you can do to re-inflate them. But that's what every U.S. government plan is still trying to do - keep housing prices from falling. In doing so, all we are really doing is wasting trillions and trillions of dollars and digging ourselves into deeper financial hole.

"Another lesson learned from the Japanese experience is that plunging asset prices do not result in typical recession. The recessions are worse - sometimes far worse."
Campbells letter