Abstract
Abstract In the previous chapter we considered the role of money and the price level in sharing risk. In this chapter we consider the role of money and credit in the determination of asset prices and the prevention of crises. The idea that the amount of money and credit available is an important factor in the determination of asset prices is not new. In his description of historic bubbles Kindle berger (1978, p. 54) emphasizes the role of this factor: “Speculative manias gather speed through expansion of money and credit or perhaps, in some cases, get started because of an initial expansion of money and credit.”
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