[–] CanIHazPhD ago
Not necessarily. A recession doesn't mean that there were malinvestments caused by artificially low interest rates. I do remember there was a central bank goign in and out and certianly there are other reasons to explain recessions, but that's besides the malinvestments theory.
So still, malinvestments when it fits, no malinvestments when it doesn't.
Thanks for pointing it out. the hike in 88 was not as significantly above that average for the period since the last recession unlike 2004-2007. The period of 94 did not have as big a drop in interest rates on average from the peak as 2004-2007 also the period where it was much lower was 2 years long, which does raise concerns for the theory.
So, going from 3 to 6 is a-ok, but going from 1 to 4 causes a recession?. And if there was a period with your so called malinvestments, that was the dot com period. Those went away after that bubble bursted, long before 2008 came along.
[–] ForTheUltimate ago
you know it goes both ways. no malinvestments when it fits, which is all the time since you can always find another explanation.
Which supports the theory that the 1% interest rates created new malinvestments.
[–] CanIHazPhD ago
So, just to be clear, the 1% interest rate from around 2002 to 2004 is enough to create your magical malinvestments, but the ~0.5% from ~2009 to 2016 is not?