I will defer to economists who have probably crunched the numbers on this and could give you an empirical answer. I'll throw out a couple observations that get partway to an answer. First, it kind of depends what you mean by loose money. Higher inflation and lower interest rates go together all things being equal...but all things are not equal. Interest rates get slashed when there are huge headwinds facing the economy and inflation is a non-threat. So if we focus on the interest rates, then yes, probably lower interest rates make it easier to borrow and speculate, which makes bubbles easier to form. Again, I'll defer to economists to check to see if that pattern holds in the real world. But if we define a loose money policy as allowing a fairly high level of inflation, then I'm not sure if loose money actually contributes to a bubble. For example, the dot com bubble of the 1990s and the housing bubble of the 2000s both occurred at a time when inflation was very low and interest rates were moderately low but nowhere near as low as they were in the 2010s. There is a different concern that gets raised about loose money. Hayek makes the argument that because capital markets are so much bigger than the real economy, there just are not enough "good" investments to be made and loose money means that banks will make more bad (or inefficient) investments. This critique strikes me as quite true given how desperate banks were to buy up derivatives comprised of risky (sub prime) mortgages in the 2000s. A loose money policy makes this problem worse, but it is really a function of a massive financial system relative to the real economy. If I had to hazard a theory of bubbles it would be that access to capital (at a reasonable interest rate) is necessary but not sufficient. At least two other things are also necessary. 1) disproportionately large capital markets relative to the real economy. 2) an irrational belief taking hold in the public that an asset will only ever go up and you have to get in as quick as you can...and keep buying as the price rises because it will rise further with no end in sight. But again, I will defer to actual economists who study bubbles on this one.