In mathematics, risk and uncertainty are different things. Models to predict asset prices treat the uncertainty of investment decisions as if they were quantifiable risks, and hence these models keep making disastrous predictions.
Huge concentrations of wealth have distorted and destabilised financial markets, which now need to be reformed.
How the rise in wealth inequality means that households now borrow from businesses, not the other way around.
Where do institutional cash pools come from, and why does it matter?
A summary of this section of the blog.
A forensic examination of a stylised company’s balance sheet, to show that business saving should, in fact, be the true source of investment.
How the efficient market hypothesis justified deregulation of financial markets, leading the to the extreme chaos, inefficiency and instability we see in these markets today.
Why the Efficient Market Hypothesis is wrong, and therefore why markets always price financial assets incorrectly.
An explanation of the “Efficient Market Hypothesis” – the belief that markets will always price financial assets correctly.
What is the “fundamental value” of a financial asset?