The Anatomy of a Bubble
On January 9th, the Economist magazine addressed the fear that current economic conditions will lead to market bubbles… again. With the combination of high prices, low interest rates and huge deficits these fears may be justified. The recovery of the global economy will dissuade authorities from raising interest rates and may incentivize investment in risky assets. The article explains that bubbles start with a “displacement” or a shock to the financial system such as the introduction of a new technology...
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