Part 11/17:
Lynn discusses the delicate balance central banks face in normalizing interest rates after long-term debt cycles. He references the 2007-2008 subprime crisis as an example of how rising rates can trigger a cascade of defaults in over-leveraged markets. He notes that current low interest rates support soaring asset prices but warns that eventual normalization could lead to corrections.
He debates the natural "fair" interest rate, considering technological progress, demographic shifts, and market expectations, but suggests that currently, rates are suppressed due to monetary policy and technological factors like digital and automated industries.