In a low rate environment, everyone takes on more risk. In a low rate environment, asset values also tend to increase. Eventually the recession occurs, loans dry up, you find out who is over...
In a low rate environment, everyone takes on more risk. In a low rate environment, asset values also tend to increase. Eventually the recession occurs, loans dry up, you find out who is over leveraged, they go bust. The potential contagion can create a negative feedback cycle on the real economy and massive swings in asset values.
The US Fed have consistently warned that this time they can't do much, and they need the politicians to step in.
In a low rate environment, everyone takes on more risk. In a low rate environment, asset values also tend to increase. Eventually the recession occurs, loans dry up, you find out who is over leveraged, they go bust. The potential contagion can create a negative feedback cycle on the real economy and massive swings in asset values.
The US Fed have consistently warned that this time they can't do much, and they need the politicians to step in.