The Long Term Discount on Stocks

As the rate of interest rises, the discount rate for stocks rises when we talked about this, the long term discount. And the price of stocks falls and people who own those stocks retrench. So in the United States, the wealth effect is much greater than in Europe, right? In most European countries, if you take out a mortgage, you takeout a mortgage at a fixed rate, okay, like say 3% for 30 years. So that would have allowed everybody with a certain degree of confidence to say, there was a recession coming, but something's changed in the American economy. John Defterios: It's the George Sorrowsization of the American mind.