Scott Sumner, "The Money Illusion: Market Monetarism, the Great Recession, and the Future of Monetary Policy" (U Chicago Press, 2021)
New Books in Economics
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The Importance of Bubbles
The term bubble is actually supposed to indicate something different. It's supposed to indicate prices that are clearly out of line with the fundamentals. And my argument is that it's very hard to know what the correct price is. Any kind of judgment of that sort is provisional. In an efficient market, you're actually going to see most highly speculative investments do poorly. But that doesn't mean the market's inefficient. So there's a lot of misunderstanding about how financial markets work. The real test of the bubble theory is whether it's useful. I don't think it's been very useful in my view to investors. We've seen with Bitcoin or NASDAQ stocks or whatever. And I don't
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