Why could low interest rates undermine an economy?

There are at least two ways in which excessively low
interest rates could undermine an economy.

First, low
interest rates could lead to inflation.  If interest rates are kept too low, it will be
too easy to borrow money.  This could overstimulate the economy, leading aggregate
demand to rise faster than aggregate supply.  This will likely lead to inflation, which
is bad for the economy.

Second, low interest rates can lead
to bubbles such as the one that hurt the US economy so badly in 2008.  When interest
rates are low, people can easily borrow money to speculate in things such as housing. 
Businesses can easily borrow money to invest in ventures that are riskier than is
prudent.  If too much of this sort of borrowing happens, the economy can be hurt badly
if the bubble pops.  Banks, for example, can lose a great deal of money if the risky
loans mentioned above cannot be repaid.  This is the sort of thing that caused the
financial crisis in the US and elsewhere beginning in 2008.