FYI: One of the biggest misconceptions about the Fed’s monetary policy is that low interest rates immediately cause investors to speculate or take on more debt. It would be silly to argue there hasn’t been any yield-chasing or excess risk-taking in recent years but there is a big difference between interest rate levels and credit (or the demand for loans).
Econ 101 teaches us that lower interest rates should cause an increase in the demand for capital, leading people to spend more, thus increasing inflation as the economy grows. That hasn’t happened and money has been easy for going on 10 years now. That’s because econ 101 doesn’t take into account the human element.
Regards,
Ted
https://awealthofcommonsense.com/2019/08/cheap-money-vs-investor-psychology/
