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Using the "Sapiens" definition, the market is a second order chaotic system - chaos which reacts to predictions of its future. If everyone expects recessions to
by xixixao 7y ago
Using the "Sapiens" definition, the market is a second order chaotic system - chaos which reacts to predictions of its future. If everyone expects recessions to happen on a certain date, can it really happen?
Are there any books you would recommend for better understanding of the global economy? Ones that really stick to what we know or have observed, not drawing conjectures such as the one in the article? I must say that my friends who have studied economics at prestigious universities often fail to explain to answer "some pretty basic questions" I have about the world economy.
- newguy1234 7y agoIf everyone predicts a recession is coming then yes, absolutely, it can start a recession. If you read that duke CFO survey basically what happens is companies begin to pull back on capital expenditures if they think the future economy is going to slow down. That simple idea manifested in enough companies can significantly reduce the amount of capital expending to make a dent in economic growth. This thinking also plays into the inverted yield curve - it is a sentiments indicator so if people are fearful about the future then they change their behaviors. Perhaps they don't invest anymore money into stocks, they buy bonds instead. Maybe instead of going on that vacation, they pay down debt or cut non-essential spending. If a large enough people do this then it will definitely have an impact on economic growth.
- bobosha 7y agoIn other words - a self-fulfilling prophecy.