Monetary Policy, Panic in Financial Markets and a Spate of Wandering Bubbles (Geldpolitik, Finanzmarkthysterie und eine Welle von Wandernden Blasen)
15 Pages Posted: 22 Mar 2009 Last revised: 25 Mar 2009
Date Written: March 19, 2009
Building upon the Austrian over investment theory it is argued that credit and asset market booms have emerged during phases of buoyant liquidity supply since the 1980s. We argue that major central banks have tended to lower interest rates too much for too long when bubbles burst and panic spread across financial markets. This caused a wave of bubbles which has recently culminated in the global financial and economic crisis. Therefore, the recent unconventional measures of monetary easing in combination with massive fiscal expansion is likely to contribute either to a new wave of bubbles or to a push in global inflation.
Keywords: Blasen, berinvestition, Finanzkrise, internationaler Kapitalfluss
JEL Classification: B53, E32, E44, E52
Suggested Citation: Suggested Citation