You go on and on about the negative effect of ageing on asset prices without mentioning Franco Modigliani’s life-cycle hypothesis even once (“Bringing Down the House,” September 24, 2011). As you explain, the young and middle-aged save for old age by buying assets, typically residential property, whereas the old sell them to pay for retirement. Given the sheer number of babyboomers, this is turning into a serious problem as the prices of assets are likely to be depressed for a long while. Once again, it is the prices of residential property that will be depressed most. All this follows from Modigliani’s hypothesis, which predicts that individuals save while they work in order to finance consumption after they retire. What is different in the present case is not only the size of the generation born between 1946 and 1964, but also the effect of the real estate boom that led to the last bust. It was precisely the babyboomers who had bought much of the residential property to save for their retirement. The real estate bubble that powered the boom in asset prices, and especially in the prices of residential property, is the key difference between any old generation and the one that came in the wake of World War II. To put it simply, in this case we have Modigliani squared by the size of the generation in question and the size of the last boom. But his life-cycle hypothesis is still all that is needed to understand the whole story.