BIS Review 114/2007  1  But, many of you have been in the market long enough a quick sweep of the room tells me I am correct indeed, many of you have been around long enough to know that markets are never really at inertia for very long periods there are always agents who are constantly looking for opportunities, driven by what Adam Smith called “animal spirits” (although these days, the politically appropriate characterization for this is that “there is always an incentive to do better for oneself.”) In addition, there have recently been events in the global arena which, as they continue to unfold, pose risks to any steady and uniform pace of economic growth and decelerating inflation which we may wish for or be envisioning.
Let me extend the analogy to Newton’s second law of motion, by suggesting that these global events could be the forces (F), which could alter the velocity of the moving object. Recall that Newton’s second law states that F = ma, where m is mass, and Force F and acceleration a are vectors that go in the same direction.