Why low rates are not good...

[Jon Q.]

"Risk taking generates growth by moving resources to enterprises which create future jobs and consumption opportunities.

Without stable and transparent economic roles that allow and encourage a reasonable return for risk taking, growth will not occur, as even wrong entrepreneurs will refuse to take risk.

Low interest rates do not encourage creative risk taking, but create just more highly leveraged investments in low risk instruments. Hence the leverage to risk taking created by the Fed's low rate policies do not result in productivity. It just distorts temperate risk taking."

-Dr. Peter Linneman 

[Steve Vaughan]

Hi @Jon Q.!  Are you referring to the impact of low rates on RE and the 'bubble-icious' prices in a lot of areas? The creation of more highly leveraged instruments in low risk instruments sums it up nicely. 

I'm seeing it here in little ol' central WA and am pondering selling 30% of my portfolio into the froth.  Lots of cash chasing a shrinking inventory here.  Lots of 'I wanna be a real estate investor' all over like the days before the crash.  It's definitely 'sexy' again.

Do you think the music is going to stop soon?  Will you have a chair? Thanks!