- 15 Settembre 2018
- by Blogger
Does it make sense that bubbles have nothing to do with central banks? According to popular thinking, an asset bubble is about a large, above historical average, increase in asset prices. A price of a thing is the amount of dollars paid for it. This means that a bubble is about large, above the historical average, payment of dollars for various assets. As a rule for this to occur there must be an increase in the pool of dollars, or the pool of money. Therefore, if one were to accept the popular definition of what a bubble is one must also accept that without the expansion in the pool of money bubbles cannot emerge.