Economic cycles are influenced primarily by financial flows, particularly savings and credit, rather than traditional indicators like inflation or interest rates. The concept of Global Liquidity, encompassing a vast $130 trillion in cash, highlights the dynamics of credit and capital in the global banking system. Since the mid-1980s, deregulation and easy money have significantly expanded international financial markets, with liquidity driving stock prices despite stagnant earnings, especially in emerging markets. Central banks' quantitative easing further emphasizes the importance of liquidity in investment strategies today.
