>We're living through an unprecedented global experiment, wherein central banks manipulate interest rates in order to encourage investment. The reasoning (as I

>We're living through an unprecedented global experiment, wherein central banks manipulate interest rates in order to encourage investment. The reasoning (as I understand it) is that if companies can borrow money with low interest rates, they're more likely to invest. By the looks of stock prices, this strategy appears to be working. Investment actually seems to be quite low right now by most metrics, relative to the supply of capital seeking investment opportunities. See, e.g., [0] (2017) Also, as I’m sure you might expect, the reason behind high stock valuations is more complex than this. Notably, stock represents a claim on future cash flows, and lower interest rates mean that the expected present value of those cash flows is higher when all else is equal. Highly recommended reading related to this: [1] [0] https://www.brookings.edu/articles/secular-stagnation-even-truer-today-larry-summers-says/ https://www.brookings.edu/articles/secular-stagnation-even-t... [1] https://johnhcochrane.blogspot.com/2018/02/stock-gyrations.html https://johnhcochrane.blogspot.com/2018/02/stock-gyrations.h...