This is an interesting read: In summary, Friedman’s fallacy is derived from two fundamental, yet counterintuitive, observations of economic history. One, when

This is an interesting read: In summary, Friedman’s fallacy is derived from two fundamental, yet counterintuitive, observations of economic history. One, when the economy is rapidly and robustly growing, and there are plenty of profitable investment opportunities, interest rates tend to increase, as both financial and non-financial institutions bid for funding/financing to take advantage of the differential between the current interest rates and the future returns on invested capital. Two, rather than differentiate between good or bad credit based only on price (via higher or lower interest rates), banks and institutional investors also differentiate between good or bad credit based on access, so that uncreditworthy businesses are altogether excluded from global debt markets, counterintuitively causing falling, rather than rising, interest rates as credit is contracting.