You walk into the room with your pencil in your hand
You see somebody naked and you say, “Who is that man?”
You try so hard but you don’t understand
Just what you will say when you get home
Because something is happening here but you don’t know what it is
Do you, Mr. Jones?
—"Ballad of a Thin Man,” Bob Dylan, 1965
For a year that many had hoped would be about healing bitter partisan divides, 2021 has gotten off to a fiery start. While the populist anger that took place on Capitol Hill was shocking, it was nevertheless a more traditional form of political protest from those disgruntled with the current state of society. The new-new thing this past week seems to have been the “protest movement” that has taken place in the financial markets, with the behavior of stocks such as GameStop and AMC.
In this Economics Weekly, we argue that the market’s behavior should not necessarily be viewed through the lens of a stock market bubble—even though it is indicative of excess liquidity in the system—but it should rather be seen as the continuation of a number of “protests” that we have been experiencing over the last few years.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.