From the Bookshelf
Yale economics professor Robert Shiller both defends the financial sector and offers suggestions for how it can be improved in “Finance and the Good Society” (Princeton University Press, 2012).
If Shiller’s goal was to provoke thought and discussion, he has done so. He defends the roles of high-frequency traders and market makers, arguing that they bring expertise and create liquidity. He also argues that people place too much emphasis on measuring wealth by currency units (e.g., dollars in one’s bank account), when their focus should be what they can purchase with those dollars.
Shiller is known for his knowledge of asset price bubbles, and he continues his discussion of them in this book. He compares bubbles to “a social mental illness.” Shiller further warns that they are hard to identify because changes in price-earnings ratios don’t prove that bubbles exist.
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