Have their been high interest rate countries with asset bubbles? E.g., dutch 1600s interest rates or 16% during Tulipmania.
That's very hard to know, but to be clear it's negative real rates that drive the bubbles. There's much more incentive to speculate when cash is a hot potato. For example Japan is much less bubbly these days than in the 1980s, even though nominal interest rates are lower now.
> Have their been high interest rate countries with asset bubbles? E.g., dutch 1600s interest rates or 16% during Tulipmania.
Presumably, that's why Tulipmania was confined to tulips, instead of spreading euphoria to absolutely every asset class. Even with high rates it's absolutely possible to have local bubbles in things like tulips, beanie babies, or Dogecoin. It only takes the promise of high real returns. When real interest rates are negative, even the promise of zero real return becomes mouthwatering.
Real rates are usually negative. Real interest rates defined as the Nominal Rate - Inflation. Japan has a negative nominal rate right now.
Let me put that a bit more precisely:
And yet people keep saying that nobody can time the market…
* You don't know the long term path of interest rates. Even the Fed Chair doesn't, because they don't know what will happen with inflation. (They do know the short term timing though, which is why they're not supposed to trade.)
* Even if you're expecting a correction, you don't know when the correction will occur or by how much. It could stay aloft like Wile-E-Coyote after the fundamentals drop out, or crash early in anticipation of the fundamentals changing.
* And when it does fall, you don't know where it will land, nor how many times it will bounce along the way down.