Diagnosis of Monetary Inflation in Asset Markets

  • Brendan Brown


The defining symptom of monetary inflation in asset markets is an empowerment of irrational forces, otherwise described as an inflaming of flawed mental processes. In an economic boom, below-neutral interest rates stimulate irrational exuberance, especially via positive feedback loops. In a weak economy, interest income famine induces desperation for yield, which leads investors to take on bad bets which for many are disguised in speculative narratives about which they would be sceptical if in rational mode. In all asset inflation, carry trades boom. The chapter includes an analysis of the leads and lags between monetary inflation in the asset markets and in the goods markets, taking account of disinflationary camouflages.


  1. Baldwin, R. (2016). The Great Convergence. Cambridge, MA: Harvard University Press.Google Scholar
  2. Brown, B. (2016). A Global Monetary Plague. London: Palgrave.Google Scholar
  3. Brown, B. (2017). A Modern Concept of Asset Price Inflation in Boom and Depression. Quarterly Journal of Austrian Economics, 20(2), 29–60.Google Scholar
  4. Friedman, M., & Schwartz, A. (1963). A Monetary History of the United States. Princeton: Princeton University Press.Google Scholar
  5. Kahneman, D. (2012). Thinking Fast and Slow. New York: Farrar, Straus and Giroux, 2011.Google Scholar
  6. Rothbard, M. (2002). A History of Money and Banking in the United States. Auburn: Mises Institute.Google Scholar
  7. Robbins, L. (2002). The Great Depression. Auburn: Mises Institute.Google Scholar
  8. Salerno, J. T. (2010). Money, Sound and Unsound. Auburn: Mises Institute.Google Scholar
  9. Shiller, R. (2000). Irrational Exuberance. Princeton: Princeton University Press.Google Scholar
  10. von Hayek, F. (2008). Prices and Production. Auburn: Mises Institute.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Brendan Brown
    • 1
  1. 1.Economic ResearchMUFGLondonUK

Personalised recommendations