Money poured into thousands of poorly conceived manufacturing and construction projects. European banks, battered by anemic returns on the Continent, were especially aggressive lenders. Similarly, capital spending in the U.S. soared from the mid-1990s on as business embraced the economic promise of the Internet. The productivity-enhancing potential of computers, software, and telecom gear also allowed companies to produce more and more goods and services despite tight labor markets. A goodly number of the bad investment ideas were funded, and we're still coping with the fallout from the great investment boom.
Demographics are one factor.
These people are eager for high returns on their savings so they can live well in retirement. Low interest rates play a role, too. Despite the recent concern about a pick-up in inflation, we live in a world of relative price stability. Central bankers, while far from omniscient, have learned over the decades what it takes to run a sensible monetary policy. The real source for price stability is rapid technological innovation, however.