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Asset Prices and Interest Rates

By someone else   2013 Sep 2, 10:50am   1 link   724 views   3 comments   watch (0)   quote      

http://marginalrevolution.com/marginalrevolution/2013/08/asset-prices-and-interest-rates.html

There has been a lot of discussion recently of Fed policy, tapering, and asset price “bubbles.” One point to bear in mind is that when interest rates are low even rationally determined asset prices may fluctuate wildly.

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1   smaulgld   2013 Sep 2, 11:42am     ↑ like (2)   ↓ dislike   quote    

yes artificially low interest rates distort asset prices, send false signals as to what to invest in and of course create bubble

2   Zakrajshek   2013 Sep 3, 9:57am     ↑ like   ↓ dislike   quote    

First, it's a very sad situation that the government (fed) has decided to set asset prices by manipulating rates. House prices got way ahead of the real economy in 2007. When prices collapsed, in order to save its banks, the fed began propping prices. Problem is the economy (wages) is stuck in 2000 and house prices in coastal California are back in 2050 again (Hey it's Back to the future IV). But it will never work unless they can raise wages to 2050 levels. Impossible, so the best the fed can do is a stalemate for now, until house prices eventually overpower them and drop back to 2000 levels.

3   ttsmyf   2013 Sep 3, 10:05am     ↑ like   ↓ dislike   quote    

Look here
http://patrick.net/?p=1219038
Massive deceptions by omission ...

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