ECON 319 Chapter Notes - Chapter 1-2: Crowd Psychology, Walter Bagehot, Mania
9 Feb 2017
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Document Summary
The speculative episode is a part of history that needs to be studied for what it is. Galbraith wants to do that through finding out what features are common to these episodes. The things that signal the return of speculation that can help in understanding and predicting. No regulation or economic knowledge can save a man from falling into the trap of speculation as (cid:373)u(cid:272)h as u(cid:374)dersta(cid:374)di(cid:374)g the (cid:272)hara(cid:272)teristi(cid:272)s of the spe(cid:272)ulati(cid:448)e pro(cid:272)ess, (cid:449)hat he ter(cid:373)s (cid:862)(cid:373)ass i(cid:374)sa(cid:374)it(cid:455)(cid:863). However, such warnings go unheeded by speculators under the claim that they are attacks, motivated by either deficient understanding or uncontrolled envy, on the process of enrichment. Or even a lack of faith in the wisdom of the market itself. More obvious features of the speculative bubble are clear for anyone open to understanding. Some new development emerges that captures the minds of investors. This increase in the price attracts new buyers, which further push the price up.
