Years of Low Interest Rates Didn't Go Too Far
They make investors take on risks they normally wouldn’t. That’s the whole point.
The American Economic Association’s new online discussion forum gives the outside world the occasional glimpse of the way economists talk among themselves about important policy issues. One example is a recent conversation thread initiated by Massachusetts Institute of Technology professor and former International Monetary Fund chief economist Olivier Blanchard and joined by several other prominent researchers. The topic was whether low interest rates had led to excessive risk taking.
With rates finally rising, the question might not be of immediate importance. But it was a crucial question during the recovery from the Great Recession, and will inevitably be brought up again the next time a recession strikes.