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CRE values: Cascading down the deteriorated scaffolding of financial engineering
- September 1, 2023: Vol. 35, Number 8

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CRE values: Cascading down the deteriorated scaffolding of financial engineering

by Stewart Rubin and Dakota Firenze

In the Lewis Carroll novel Sylvie and Bruno, the Outland Emperor wishes to make his subjects twice as rich. A “New Money Act” is proposed that involves doubling the value of every coin and banknote in the realm. “I wonder why nobody ever thought of it before!” says the emperor’s adviser, the Outland Professor. “And you never saw such universal joy. The shops are full [of people] from morning to night. Everybody’s buying everything!”

The United States did not double the value of every coin and banknote but did keep interest rates near zero for almost an entire 15-year period, which resulted in increased (some would say “distorted”) asset values.

To stimulate the economy in the wake of the global financial crisis (GFC), the Federal Reserve lowered the federal funds target rate down to a range of 0 percent to 0.25 percent beginning in January 2009. The rate remained at that level until December 2015, before being raised gradually to a range of

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