…current dynamic leads to bubbles. The idea is that real GDP growth feeds upon itself into increasing productive capacity of the economy. An atmosphere of bubbles appears. People think that…

…from weak effective demand… then China is going to be in trouble. Asset Bubbles As an economy improves, financial repression intensifies. Money is implicitly transferred from savers to borrowers. Asset…

…financial bubbles and dangerous buildups in leverage. The idea that regulation can allow the growth benefits of easy credit to come without cost is a chimera. The increases in asset…

…do we need to see here? The larger bubbles show larger increases in productivity. You will notice that the larger bubbles primarily appear during those recessionary transition periods. (between the…

…Standard analysis even of irrationbal bubbles assumes that people know past prices (including of a house with given characteristics and of a given basket of non-durable consumption goods). The assumption…

…central banks keep interest rates low enough for a slow growth world, they risk creating asset price bubbles based on cheap credit that can end in financial catastrophe. Raising rates…

…providing funds to institutions that were solvent but illiquid. There was a vigorous debate before the global crisis of 2008-09 over whether central banks should attempt to deflate asset bubbles,…

…hindsight, it seems that GDP was driven up by the dot.com and housing bubbles during those periods. If taken literally, the trend implies that GDP growth declines by -0.029 percent…

Shiller Hystericizes The US Housing Market I have the deepest respect for Robert Shiller, who has been one of the most serious students of the dynamics of speculative bubbles there…

…richer. Galbraith’s bezzle also captures the dynamic of speculative bubbles, which are a form of fraud we collectively inflict on ourselves. Investors buy in believing they will be able to…