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Higher savings lead to higher investment lead to lower interest rates lead to higher asset prices, sure. However, the rest of your theory falls apart. Corporat
by ikeboy 7y ago
Higher savings lead to higher investment lead to lower interest rates lead to higher asset prices, sure.
However, the rest of your theory falls apart. Corporate profits have simultaneously been increasing, GDP is increasing, the claim that business is harder isn't reflected in the data.
Also, low interest rates aren't enough to account for a significant portion of the asset price increase. We had low interest rates in 2008 coincide with decreasing asset values.
- entangledqubit 7y agoWhich part did you read as claiming "business is harder"?
- ikeboy 7y ago"Since the people who would spend the money (i.e., the less wealthy) don't have it, making returns becomes more difficult." The claim is that there's less spending and this means returns, i.e. business profits are harder to get.
- entangledqubit 7y agoI guess I read it more as valuations get bloated which makes the returns more difficult but not that business profits themselves are "harder" to get in an effort per unit sense.
- ikeboy 7y agoIt's talking about consumer spending, which would affect business profits potentially but not business valuations directly.