The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis

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Introduction—The Nature of Carry

WHY HAVE STOCK MARKETS, OVER THE PAST 25 YEARS, EXPErienced huge rises and crashes? Why did the US stock market, in particular, quadruple over the years following the 2007–2009 global financial crisis even though US economic performance was at best so-so? Why do companies keep buying back their own shares rather than making real investments? Why do professional stock market investors and traders hang on every word that central bankers utter? Why does it seem that everyone wants to live in the big, overcrowded global cities, such as London and New York, even though new technology supposedly allows us to live and work almost anywhere? What explains the rise of populist political movements?

Needless to say, any ...