Explaining asset value suppression at zero interest

One question arose on the fact why asset values are getting suppressed at lower interest rates. Here is a short explanation. The reason is that when cost are zero there are a couple of factors suppressing asset values. Factors are the competition between consumption and investing as well as that interest displays the cost of investing. Without the effective cost structure in place, values have to be calculated based on assumptions. As assumptions generate uncertainty, it becomes riskier to invest and in consequence asset values getting suppressed.


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