The Minsky Moment: Rising rates threaten credit, AI, and stocks
Hyman Minsky, the late Columbia University credit cycle expert, taught us that a long credit and asset-market boom fueled by cheap money inevitably leads to a moment when those markets flip and panic selling sets in. All too often, those moments came when interest rates started to increase at a rapid pace. In turn, defaults become very much more common as borrowers find it difficult to service their debt when they have to roll over low-interest-rate loans at very much higher interest rates. At the same time, stock markets at high valuations lose their appeal as high-yielding government bonds offer a more attractive and less risky investment alternative.
