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”.
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Famous quotes containing the words chain, reactions and/or economics:
“Man ... cannot learn to forget, but hangs on the past: however far or fast he runs, that chain runs with him.”
—Friedrich Nietzsche (1844–1900)
“Separation anxiety is normal part of development, but individual reactions are partly explained by experience, that is, by how frequently children have been left in the care of others.... A mother who is never apart from her young child may be saying to him or her subliminally: “You are only safe when I’m with you.””
—Cathy Rindner Tempelsman (20th century)
“There is no such thing as a free lunch.”
—Anonymous.
An axiom from economics popular in the 1960s, the words have no known source, though have been dated to the 1840s, when they were used in saloons where snacks were offered to customers. Ascribed to an Italian immigrant outside Grand Central Station, New York, in Alistair Cooke’s America (epilogue, 1973)