Garys Economics Why do asset prices keep going up?
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May 10, 2026 Markets hitting record highs, with stocks, gold and silver surging despite geopolitical and economic shocks. Discussion of why low rates and post-2008 policy alone do not explain the rise. Focus on deficits, who receives the money and why wealthy recipients buy assets rather than consume. Exploration of distributional crises, impacts on workers and housing, and the case for wealth taxation.
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Asset Prices Rising Amid Obvious Economic Crisis
- Global asset prices (stocks, gold, silver) hit multi-year or all-time highs despite clear economic crises like war and inflation.
- Gary Stevenson highlights simultaneous highs in US, Japan, FTSE, gold (+98%) and silver (+174%) as puzzling against weak living standards.
Interest Rate Mechanics Inflate Asset Valuations
- Conventional theory links falling interest rates to rising asset prices because lower rates raise the present value of future returns.
- Stevenson uses a rental example: a £50k rent house equals £1m at 5% rates but £5m at 1% rates, explaining big asset gains when rates fall.
Rising Rates Did Not Stop Post‑COVID Asset Gains
- The interest-rate explanation fails to explain post-COVID asset rises because asset prices rose even as inflation and interest rates later increased.
- Stevenson notes COVID caused weak economy plus rising rates, yet stocks and gold still climbed, challenging simple rate-based narratives.