After the internet/stock market bubble burst in 2000 the Fed lowered interest rates dramatically, which led to a huge runup in real estate and other interest-rate-sensitive asset prices. Now that this asset/credit bubble has burst, the Fed is lowering interest rates again. Will this really help, or will it just re-ignite the same asset-inflation fire? Here's the view of somebody who has watched a similar situation unfold in Japan over the last several years. What do you think?

Double Bubble Trouble

OG - I'm not quite sure.

On a selfish note - Glad the rates are so low as hubby and I had to take out a home equity loan and the rates are very low. They told us to lock in next week as they expect it to go lower.

But - I don't see it helping. I also don't see a real esate boom either with the lower rates.
Things are very tight for a lot of folks and even the lower rates are not attracting people.

But it sure helped with my monthly payment. Will it make me spend more? Gosh, I hope not. :(.

If you come to think of it, it will happen over and over and over again. It was proven by history. So yeah it will re-ignite the same asset-inflation fire in years to come, mostly depends on the interest of people wanting to buy more or afford more. So we are only to blame ourselves for it.
Lowering interest rates again will help, but the people might want to wait and see how low can it go.