What Caused the Historically Low Interest Rates.?

applied for a business LOC with my banker today.

also told her i wanted a HELOC on my primary residence. interest rates way too high. she said maybe they will come down later in year. fat chance baby.

COVID economy shutdown

“Historically Low Interest Rates” equal the three year old screaming “I want what a I want when I want it”

Juice the present economy, and take credit for it, and damage the future economy with the added debt. “Hey, when the schitt hits the fan on this, we’ll be sitting on the beach earning 20%!”

I agree yet add to it that Covid juiced the money and kept the interest rates lower, for longer. Once the economy caught its footing, rates rose (arguable higher than they should have been without Covid stimulus) to hold back the inevitable inflation.

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Im still young enough, but I don't really understand why more boomers didn't take more advantage early on of the low interest rates? Seems like guys that were still working and investing in things like real estate would have went hard into real estate with 30 year loans at 3% just because of the great rates. The younger generations really didn't understand how good those sub 4% rates were.

ETA: I'm kinda pissy my parents and in laws didn't tell me I should have just bought a bigger house early with a 30 year term. I haven't been in my dream house. I know that could appear to be a dumb idea, but waiting is not always perfect either. I wish I would have in the least invested in a "dream" lot when rates were good and prices were good.

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Boomers are stupid about shite like this. It's really frustrating.

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ETA: I'm kinda pissy my parents and in laws didn't tell me I should have just bought a bigger house early with a 30 year term.

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so it is their fault?



lift your skirt and grab your balls and be a man son. take responsibility.

The FED wanted to prop up Barak Obama's shite-show economy.

As others have mentioned, the main culprit is the 2008 crash but I think 9/11 played a small role as well as I believe it had whetted the appetite for a sustained low-rate environment.



Going into 9/11 we were just starting to recover from the Dotcom bubble popping. 9/11 was huge on its own. Rates dropped in an extremely fast timeframe in order to keep the economy from crashing. Over the next few years they were slowly raised back up, but we hadn't fully recovered when the subprime bubble popped. In that event, rates were dropped even lower (near zero). From that point, any time the Fed even hinted about an increase the market would throw a fit and the Fed would back down (the market had its sustained low-rate environment and clung to it like an addict does their back of crack). The Fed finally began gradually raising rates just before COVID, but (as you can see from the graph) it was only about halfway to where it should have been.

Having rates higher tempers growth, but in a strong growth scenario you need that to keep the economy from overheating (and then crashing). Having higher rates also gives you more room to cut when economic storms are on the horizon (or just spring up, as in the case of COVID) and that cutting allows for better weathering through those storms.

Have you seen The Big Short?

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also told her i wanted a HELOC on my primary residence. interest rates way too high. she said maybe they will come down later in year. fat chance baby.

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I keep saying this to my banking buddies, as well. I don’t see how they can possibly go down unless something big were to happen/change.