How an Economy Grows and Why It Crashes

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In addition, rates that are too low relative to the supply of 
savings send false signals to borrowers about the health 
of the economy and the viability of investments. Since 
consumption has not really been deferred to the future 
(which would be the case had interest rates fallen due to 
market forces), capital investments intended to satisfy future 
consumption will be much less likely to succeed. The result 
is phony booms followed by spectacular busts, such as those 
just experienced in stocks and real estate.

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