It is easy to adjust to falling interest rates, but very difficult to adjust to rising interest rates

Interest rates have been on a downward trend in OECD countries for nearly 40 years. Economic agents (governments, companies, households, financial sector) have easily adjusted to this fall in interest rates by : Increasing debt ratios; Increasing debt leverage, among companies (debt-financed share buybacks) and banks; Developing "leveraged" finance (hedge funds, LBOs, etc.). But if interest rates were to rise again in the future, the adjustment would be difficult, painful and costly: deleveraging, equity market financing and no longer debt financing , disappearance of "leveraged finance". There appears to be a great deal of irreversibility when behaviours have had time to adjust to a low interest rate environment.