IntroductionIt was previously assumed that economic investors and regulators (agents) used all available information and then market prices reflected this information with assets representing the their core value, encouraging the position that agents' actions were rational. The global financial crisis (GFC) of 2007-2008 is speculated to have originated from the belief that all available information had been used, resulting in agents not thoroughly investigating and confirming “the true value of publicly traded securities.” , leading to a failure to record the presence of an asset price bubble preceding the global financial crisis (Ball 2009). This essay will use EMH notions to determine the extent to which they can explain the global financial crisis using the United States as a case study. Efficient Market Hypothesis Fama proposed the EMH, in 1965, stating that, provided all available information is used, market prices will reflect reasonably accurate approximations of the present intrinsic value of securities; the use of this information would make the agents' actions rational. Ball expands on this concept by suggesting that competitive markets lead to costs that decrease in line with the use of information. The question proposed by EMH is therefore: why did the global financial crisis occur if agents are using every information at their disposal and how can they rely on it? do EMH notions contribute to market crashes? Ball makes a significant point by suggesting that the revelation of new information causes market prices to fall due to the reassessment of expectations. In the case of the 2007-2008 global financial crisis, subprime mortgages were permitted and this led to asset price bubbles – an ignored feature of the market, thought to be a major cause of finance… middle of paper… .cmillan , 2007. http://web.mit.edu/alo/www/Papers/EMH_Final.pdf (accessed April 7, 2014).Mishkin, Frederic S. Board of Governors of the Federal Reserve System, “How Should We Respond to asset price bubbles?." Last modified May 15, 2008. Accessed April 12, 2014. http://www.federalreserve.gov/newsevents/speech/mishkin20080515a.htm.Muth, John F. “Rational Expectations and the Theory of Price Movements.” Econometrics. NO. 3 (1961): 315-335. http://www.jstor.org/stable/1909635 (accessed April 6, 2014).Trading Economics, “UNITE STATES GDP REVISED UP TO 2.6% IN Q4.” Accessed April 10, 2014. http://www.tradingeconomics.com/united-states/gdp-growth. U.S. Department of Labor: Bureau of Labor Statistics, “US GDP REVISED UP TO 2.6% IN 4TH Q." Last modified April 11, 2014. Accessed April 11, 2014. Labor force statistics from the current population survey.