The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts

This paper discusses the factors which, in the absence of strong financial regulation, sustain the Iron Law of the Financial Markets asserting that speculative booms and busts occur more or less regularly from 17 century to the present. The first factor is that financial markets are self-fulfilling...

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Autor principal:	Ognjen Radonjić
Formato:	article
Lenguaje:	EN FR SR
Publicado:	University of Belgrade 2016
Materias:	speculation speculative bubble self-fulfilling prophecies insiders outsiders mass psychology Anthropology GN1-890
Acceso en línea:	https://doaj.org/article/b7fdff0a8a00466394b45136e760aa88
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id	oai:doaj.org-article:b7fdff0a8a00466394b45136e760aa88
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spelling	oai:doaj.org-article:b7fdff0a8a00466394b45136e760aa882021-12-02T00:57:50ZThe Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts10.21301/eap.v8i4.110353-15892334-8801https://doaj.org/article/b7fdff0a8a00466394b45136e760aa882016-02-01T00:00:00Zhttps://eap-iea.org/index.php/eap/article/view/219https://doaj.org/toc/0353-1589https://doaj.org/toc/2334-8801This paper discusses the factors which, in the absence of strong financial regulation, sustain the Iron Law of the Financial Markets asserting that speculative booms and busts occur more or less regularly from 17 century to the present. The first factor is that financial markets are self-fulfilling system. The second is that human nature does not change and is based on egoism, materialism, loss aversion, exaggerated hopes and fears, emulation, propensity to gamble, herd behavior and so on. Lastly, there is the extreme brevity of the financial memory. In order to enable economic authorities and/or individuals to detect timely that the unsustainable boom is under the way, we have identified the common features of historically recorded speculative episodes. Stages through which the system passes on its way from unsustainable rise to inevitable fall are: displacement, boom, overtrading, financial distress and discredit or revulsion.Ognjen RadonjićUniversity of Belgradearticlespeculationspeculative bubbleself-fulfilling propheciesinsidersoutsidersmass psychologyAnthropologyGN1-890ENFRSREtnoantropološki Problemi, Vol 8, Iss 4 (2016)
institution	DOAJ
collection	DOAJ
language	EN FR SR
topic	speculation speculative bubble self-fulfilling prophecies insiders outsiders mass psychology Anthropology GN1-890
spellingShingle	speculation speculative bubble self-fulfilling prophecies insiders outsiders mass psychology Anthropology GN1-890 Ognjen Radonjić The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
description	This paper discusses the factors which, in the absence of strong financial regulation, sustain the Iron Law of the Financial Markets asserting that speculative booms and busts occur more or less regularly from 17 century to the present. The first factor is that financial markets are self-fulfilling system. The second is that human nature does not change and is based on egoism, materialism, loss aversion, exaggerated hopes and fears, emulation, propensity to gamble, herd behavior and so on. Lastly, there is the extreme brevity of the financial memory. In order to enable economic authorities and/or individuals to detect timely that the unsustainable boom is under the way, we have identified the common features of historically recorded speculative episodes. Stages through which the system passes on its way from unsustainable rise to inevitable fall are: displacement, boom, overtrading, financial distress and discredit or revulsion.
format	article
author	Ognjen Radonjić
author_facet	Ognjen Radonjić
author_sort	Ognjen Radonjić
title	The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
title_short	The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
title_full	The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
title_fullStr	The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
title_full_unstemmed	The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts
title_sort	iron law of financial markets: self-fulfilling prophecies and speculative booms and busts
publisher	University of Belgrade
publishDate	2016
url	https://doaj.org/article/b7fdff0a8a00466394b45136e760aa88
work_keys_str_mv	AT ognjenradonjic theironlawoffinancialmarketsselffulfillingpropheciesandspeculativeboomsandbusts AT ognjenradonjic ironlawoffinancialmarketsselffulfillingpropheciesandspeculativeboomsandbusts
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The Iron Law of Financial Markets: Self-fulfilling Prophecies and Speculative Booms and Busts

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