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How does a crisis begin? Robert Shiller knows the answer: "If people
Suddenly stop spending money. "So if they do not buy the car, they can join it
think again of the new kitchen or just not go on vacation. All this can be done in the
worst case lead to a slump in economic performance. And that settles for
By answering a simple question, Shiller explains, "What is the occasion for the
Purchase waiver? "
Shiller, 72, receives in his office a Victorian-style villa that is now part of the Yale University campus on the US East Coast. He quickly clears the black sofa on which folders and books are stored, and the desk is also covered with papers. When it comes to questions of the economy, the economics Nobel laureate is in demand these days a man. The financial news service Bloomberg wants to know from him what happens in the stock markets ("I do not know if it is a market correction or a bear market"). US stock exchange CNBC is interested in whether US real estate is overvalued ("I do not believe prices will fall soon"). In the main profession, Shiller may be Professor of Economics at Yale University. He is also a prophet to investors around the world.
There are good reasons for it. In early 2000, Shiller's book appeared
in which he warned of a speculative bubble on the stock market – shortly thereafter broke the courses. It turned out that the bubble had actually burst. In the mid-2000s, Shiller began to warn of a slump in US real estate prices – when this actually happened, it led to the 2007 financial crisis and recession.
Today, Shiller is particularly interested in one thing: "It's all about stories," he says. He is convinced that stories influence the economy significantly. That's why Shiller researches what people tell, why some narratives become traditional truths, how these stories change, and above all, what they change.
Shiller has now written a book on the results of his work, and recently sent the manuscript to the publisher.
is the title. By narrative, Shiller does not refer to a narrative in the classical sense, but an interpretation of events. Narratives are also stories for him with which people explain what is happening around them.
Particularly influential are stories with a moral, says Shiller. "Let's take the wild twenties, which are portrayed as a time of wild parties and permissive women, when it was not until the 1929 crash and then the Great Depression that was interpreted as a consequence of a moral failure." On the Sunday after the stock market collapse, preachers in the US portrayed this as a result of moral decline. This story is still working.
This article is from TIME no. 45/2018. Here you can read the entire issue.
Many events can be explained by the story that is spun around them. The latest stock market boom, which ended in early October. One reason for this long exuberance on the financial markets, according to Shiller's assessment, is President Trump. Even if investors were not Trump supporters, they would have believed that Trump would boost the economy. Trump is almost a master of the narrative, says Shiller. "His story is that of a brilliant self-made billionaire, even though he's not one, one of the toughest ones says, 'You're fired!' Someone who can save a business, the land and the rest of the world."
This narrative would be spread over reality television broadcasts. With advice such as "Live in a big way and boast about it!", Which Trump teaches in his books and which he himself experiences, he not only inspires his followers, believes Shiller. He says, "Donald Trump wakes you up
the animal instincts that drive the economy. "
With this, Shiller refers to an idea that was once developed by the British economist John Maynard Keynes (1883-1946). According to Keynes, economic decisions are largely based on feelings, not rational cost-benefit considerations. So Keynes wrote in 1936 in his work
General theory of employment, interest and money:
"If the animal instincts are subdued and the sudden optimism ceases, then entrepreneurship will dwindle and die – although the fear of loss may not have had a more reasonable foundation than the hope of profit."
Shiller has this concept with the economist and Nobel laureate George Akerlof in the joint publication
picked up and refined. In the book, published in 2009, the two economic researchers explain that psychological factors were largely responsible for financial crises and recessions. As an example, they cite the blind belief that house prices would continue to rise.