[quote=flu][quote=CA renter]
If you can hold all other variables constant, then asset prices — especially those that are dependent on credit, like houses — would fall when rates rise. If you doubt this, ask yourself why the Fed has been hammering rates down during the entire housing/credit bubble bust.[/quote]
Um… historical data doesn’t seem to support this…Between late 70ies to mid 80ies, didn’t interest rates rise from roughly 9% to 18%? But during that period, home prices gained 30%….
Any financial gurus can offer an explanation?[/quote]
Inflation in that period was about twice that. Seriously 65% from 1978 to 1985. ’77 t ’84 was 75%. And it was 50% from 1975 to 1980.
