Capital Wars

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Economic cycles are primarily influenced by financial flows, particularly savings and credit, rather than traditional indicators like inflation or interest rates. The concept of Global Liquidity encompasses a vast $130 trillion pool of capital that significantly impacts banking systems and wholesale money markets. Since the mid-1980s, deregulation and easy money have intensified financial globalization, affecting markets worldwide. The liquidity theory of investment has gained prominence, especially as central banks engage in quantitative easing and corporate cash reserves grow, driving stock prices despite stagnant earnings.