The Timing and Character of Investment Legislation

A recent IMF study of 300 years of financial history has found crucial support for socionomic theory.

In a survey of ten of the "most infamous financial booms and busts since the 18th century," the study uncovered a consistent pattern in which authorities introduce financial regulations after a bust and then relax or repeal financial regulations after a boom--followed by another round of regulations after the boom ultimately goes bust.

Socionomists have long noted how social mood infuses regulators and speculators alike with optimism during bull markets and with fear during bear markets. Recent calls to repeal the Dodd-Frank financial regulations while stocks sit at all-time highs is merely the latest chapter in this centuries-old saga.


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