Sunday, 22 December 2013

Quote of the Day: Bubbles and Psychology

Contrary to [Robert] Shiller, in order to establish that a bubble is forming we don’t need to apply the same methodology employed by psychologists. What we require is the establishment of a correct definition of what bubbles are all about. Once it is done one discovers that contrary to popular thinking bubbles have nothing to do with some kind of psychological malfunction of individuals — they are the result of loose monetary policies of the central bank.