Chain Reactions in Economics
In 1963 Friedman and Schwartz proposed a positive feedback loop as a mechanism for catastrophic failures in economics: “It happens that a liquidity crisis in a unit fractional reserve banking system is precisely the kind of event that trigger- and often has triggered- a chain reaction. And economic collapse often has the character of a cumulative process. Let it go beyond a certain point, and it will tend for a time to gain strength from its own development as its effects spread and return to intensify the process of collapse”.
Read more about this topic: Chain Reaction
Famous quotes containing the words chain, reactions and/or economics:
“Loyalty to petrified opinions never yet broke a chain or freed a human soul in this world—and never will.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)
“Prolonged, indiscriminate reviewing of books is a quite exceptionally thankless, irritating and exhausting job. It not only involves praising trash but constantly inventing reactions towards books about which one has no spontaneous feeling whatever.”
—George Orwell (1903–1950)
“Women’s battle for financial equality has barely been joined, much less won. Society still traditionally assigns to woman the role of money-handler rather than money-maker, and our assigned specialty is far more likely to be home economics than financial economics.”
—Paula Nelson (b. 1945)