What is the role of monetary policy in a bubbly world? To address this question, we study an economy in which financial frictions limit the supply of assets. The ensuing scarcity generates a demand for ``unbacked" assets, i.e., assets that are backed only by the expectation of their future...

All Rational Expectation Theorists rely on the Fallacy of Conditional Apriorism (Long Runism)in order to operationalize the Objective Limiting Frequency Interpretation of Probability. However, such a limit only occurs in the far distant long run as the number of observations from Time Series...