Low interest rates make borrowing cheap, so companies flood money into real estate and stocks, inflating prices. This also drives up costs for regular people, fuels risky lending (remember subprime mortgages?), and when the bubble bursts... guess who gets hit the hardest when companies start scaling back and lenders come calling?

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hdgvhicv 7 days ago | parent [-]

Stocks increased more from 1985 to 2005 with higher rates than from 2005 to 2025.

https://ofdollarsanddata.com/sp500-calculator/

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micromacrofoot 6 days ago | parent | next [-]

Stocks returned more from 1985–2005 than 2005–2025 because rates were falling, the economy was booming, and valuations had space for growth

also https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

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bluecalm 7 days ago | parent | prev [-]

As they should as market values stocks as expected average (and time discounted) risk free rate + risk premium.

This means stocks will return less in low rates environment unless there is a lot of additional growth.

	▲	hdgvhicv 6 days ago \| parent [-]
		That seems to contradict > Low interest rates make borrowing cheap, so companies flood money into real estate and stocks