There’s an issue with loose lending standards. There seems to be a pattern. Excessive borrowing and risk taking is encouraged. Then something somewhere blows up and everybody flees and the Federal Reserve has to step in and bail out that market. It happened in the 90s, the 2000s, and now with the pandemic. And yet the lesson doesn’t seem to be learned. We are on the same path as before. The current low interest environment pushes investor towards more risk taking. The main question is how do you restrict the amount of excessive risk-taking occurring at the same time? Is it possible? If yes how would you even do that.
[…] Low Interest Rates and Risk Taking (Brian Langis) […]