- Animal-Spirits-0.mp3
- Animal-Spirits-0.mp4
- Animal-Spirits-I.mp3
- Animal-Spirits-I.mp4
- Animal-Spirits-II.mp3
- Animal-Spirits-II.mp4
- Animal-Spirits-III.mp3
- Animal-Spirits-III.mp4
- Animal-Spirits-Interlude.mp3
- Animal-Spirits-Prequel.mp3
- Animal-Spirits-Prequel.mp4
- Animal-Spirits-live-opening.mp3
[Intro]
Can you hear it?
(Animal spirit)
Do you fear it?
(Animal spirit)
[Verse 1]
Sentiment
(What is meant?)
Volatility
(Emotional uncertainty)
[Bridge]
Can you hear it?
(Animal spirit)
Do you fear it?
(Animal spirit)
[Chorus]
Interest and money
(Vinegar or honey)
Psychological factors
(Market reactors)
[Verse 2]
Optimism
(If that’s what hope really means)
Pessimism
(Shifting between the extremes)
[Bridge]
Animal spirits (are they here?)
Animal spirits (… is it clear?)
[Chorus]
Interest and money
(Vinegar or honey)
Psychological factors
(Market reactors)
[Bridge]
Are you near it?
(Animal spirit)
Do you cheer it?
(Animal spirit)
[Outro]
Animal spirits (are they here?)
Animal spirits (… is it clear?)
ABOUT THE SONG
The term “animal spirits”, popularized by economist John Maynard Keynes in The General Theory of Employment, Interest, and Money (1936), refers to the emotional and psychological factors that drive human behavior in economic decision-making, particularly in the stock market and broader economy. Here’s how it connects to these areas:
1. Stock Market
- Investor Sentiment: Animal spirits manifest in investor confidence or fear, influencing stock prices. For example:
- High optimism can drive stock prices up, sometimes leading to speculative bubbles.
- Fear or panic can lead to sharp sell-offs, even when fundamentals don’t justify such moves.
- Volatility: Emotional reactions to news, uncertainty, or trends often lead to market volatility, amplifying booms and busts.
2. Economy
- Consumer Behavior: Animal spirits affect how consumers feel about spending and saving. When confidence is high, people are more likely to spend, boosting economic activity. Conversely, fear can lead to reduced spending and increased saving, slowing the economy.
- Business Decisions: Entrepreneurs and companies rely on confidence to make investment decisions. Strong animal spirits may encourage businesses to expand or hire, while weak spirits can result in cutbacks.
- Policy Impact: Even when monetary or fiscal policies are sound, the effectiveness of those policies depends on how they influence animal spirits. For instance, tax cuts might fail to stimulate the economy if pessimism dominates.
3. Key Features of Animal Spirits
- Optimism and Pessimism: Shifts between these extremes can drive economic cycles.
- Herd Behavior: People often follow trends, amplifying collective movements in markets.
- Uncertainty: In the absence of clear information, emotional instincts play a larger role in decision-making.
- Confidence in Leadership: Trust in governments, central banks, or corporate leadership can influence economic momentum.
Conclusion
Animal spirits are crucial in explaining fluctuations in the stock market and economy that cannot be attributed purely to rational calculations. They highlight the human, emotional aspect of economics, which can lead to unpredictable outcomes, from growth spurts to recessions. Understanding these forces helps policymakers and investors anticipate and respond to economic trends beyond hard data.