Skip to main content

A Modern Concept of Asset Price Inflation in Boom and Depression

Brendan Brown

The aim of this article is to demonstrate how monetary disorder spawns asset price inflation. This is re-interpreted here according to modern usage as meaning an empowerment of irrational forces in asset markets. The author blends insights from behavioral finance research and from Austrian business cycle theory to develop a hypothesis about how mental flaws of investors become inflamed by monetary influences and how these contribute to episodes of widespread mal-investment. Identifying two types of asset price inflation—boom type and depression type—this article draws on the last century of history to illustrate both through several stages, accompanied by a variable intensity of inflation symptoms in the goods markets.

To read the full article in PDF format click here.

Related Articles

Trump's Fiscal Policy Is Moving from Loose to Reckless

Irwin M. Stelzer

“Oh, when will they ever learn?” asked Pete Seeger in 1955...

Continue Reading

The New Landowners

Ronald W. Dworkin

Today’s debates about political economy are not unprecedented; in fact, they bear a striking resemblance to the controversies of 19th-century Britain...

Continue Reading

In Praise of Disconnects

Irwin M. Stelzer

Jay Powell continues to show his independence from Donald Trump...

Continue Reading