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Is the era of cheap money over?

Paul Krugman
Published Wed, Jun 22, 2022 · 03:45 PM

INTEREST rates are up. Stocks – especially glamour stocks, like Tesla – are down. And the crypto crash has been truly epic. What’s going on? 

Well, many people I read have been offering an overarching narrative that runs something like this: For the past 10 or maybe even 20 years, the Fed has kept interest rates artificially low. These low rates inflated bubbles everywhere as investors desperately looked for something that would yield a decent rate of return. And now the era of cheap money is over, and nothing will be the same. 

You can see this narrative’s appeal; it ties everything up into a single story. Yet to paraphrase H L Mencken, there is always a well-known explanation for every economi…

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