Last week's stock market turbulence was a wake-up call for investors after years of steady returns and low volatility. Jacobin's Seth Ackerman spoke with economist J. W. Mason about what lies behind the turmoil, the dilemma now facing central bankers, and how rentiers stubbornly refuse to be euthanized.
SA: After a year of tranquility, the stock market suddenly became volatile over the past week. Why?
JWM: The central fact about the stock market is that you can't explain short-term movements on the basis of any kind of objective factors, because prices are fundamentally self-referential. The short term return on stocks is dominated by capital gains, which means that when you're deciding what a good price is today you're just trying to guess what prices will be tomorrow.
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