Difference between revisions of "Economic bubble"
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An '''economic bubble''' is an [[economic]] cycle characterized by rapid expansion followed by rapid contraction (the bursting of the bubble).<ref>[http://csinvestor.com/investing-guide/economic-bubbles/ Economic Bubbles: Understanding the role of bubbles in an economy]</ref> During the expansion period of a bubble, people often buy [[assets]] in the belief that they will necessarily be able to sell them [[Greater Fool Theory|at a profit]]. Examples include [[tulip mania]], the [[dot-com bubble]], and the [[housing bubble]]. | An '''economic bubble''' is an [[economic]] cycle characterized by rapid expansion followed by rapid contraction (the bursting of the bubble).<ref>[http://csinvestor.com/investing-guide/economic-bubbles/ Economic Bubbles: Understanding the role of bubbles in an economy]</ref> During the expansion period of a bubble, people often buy [[assets]] in the belief that they will necessarily be able to sell them [[Greater Fool Theory|at a profit]]. Examples include [[tulip mania]], the [[dot-com bubble]], and the [[housing bubble]]. | ||
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| + | "Over the past decade, we have added more than 10 trillion dollars<ref>http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm</ref> to the [[national debt]]. But most Americans have shown very little concern as the balance on our national [[credit card]] has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, [[Wall Street]] has been transformed into the biggest casino on the planet, and much of the new money that the [[Federal Reserve]] has been [[Quantitative easing|recklessly printing]] up has gone into [[stock market|stocks]]. But the [[Dow Jones industrial average|Dow]] does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of [[Stock market crash of 1929|1929]]. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows<ref>http://www.businessinsider.com/chart-margin-debt-bearish-signal-2013-5</ref>. But this time when a [[economic crash]] happens it could very well be unlike anything that we have ever seen [[Great Depression|before]]. The top 25 U.S. [[banks]] have more than 212 trillion dollars of exposure to [[Derivatives bubble|derivatives]] combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. [[GDP]] for an entire year is only a bit more than 15 trillion dollars."<ref>http://oathkeepers.org/oath/2013/05/22/america%E2%80%99s-bubble-economy-is-going-to-become-an-economic-black-hole</ref> | ||
==References== | ==References== | ||
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<references/> | <references/> | ||
| + | ==External Links== | ||
| + | * http://oathkeepers.org/oath/2013/05/22/america%E2%80%99s-bubble-economy-is-going-to-become-an-economic-black-hole/ | ||
[[Category:Economics terms]] | [[Category:Economics terms]] | ||
Revision as of 21:36, April 9, 2014
An economic bubble is an economic cycle characterized by rapid expansion followed by rapid contraction (the bursting of the bubble).[1] During the expansion period of a bubble, people often buy assets in the belief that they will necessarily be able to sell them at a profit. Examples include tulip mania, the dot-com bubble, and the housing bubble.
"Over the past decade, we have added more than 10 trillion dollars[2] to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows[3]. But this time when a economic crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars."[4]
References
- ↑ Economic Bubbles: Understanding the role of bubbles in an economy
- ↑ http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm
- ↑ http://www.businessinsider.com/chart-margin-debt-bearish-signal-2013-5
- ↑ http://oathkeepers.org/oath/2013/05/22/america%E2%80%99s-bubble-economy-is-going-to-become-an-economic-black-hole
See Also
- Economic bubbles: The Coming Derivatives bubble, Real estate bubble (Subprime loans, Bailout, Obama administration corporate bailouts), Dot com bubble (Tulip mania)
- Economic collapse: Inflation, Agflation, Deflation, Stagflation, Hyperinflation, Panic of 1907, Panic of 1893, Panic of 1837
- Stock market crash (Stock market crash of 1929) leading to Bank runs and Great Depression (Economic depression)
- Financial Crisis of 2008 leading to Recession of 2008 (Recession), Economic stimulus, American Recovery and Reinvestment Act of 2009, Recovery Summer 2010
- Obamanomics: Obamunism Economic planning of the Obama administration fiscal policy, Obama administration monetary policy, Obamacare, Federal funding via Crony capitalism (Obama donor list), Deficit spending, Similarities between Communism, Nazism and liberalism, Obamageddon
- National debt: Federal Reserve System's Ponzi scheme of Quantitative easing-Debt monetization devaluation of Fiat currency through Money supply-Treasury bills bought mostly by China and Japan
- John Maynard Keynes' liberal Keynesian economics of Barack Obama
- Ludwig von Mises' conservative libertarian Austrian economics and Fiscal conservatism-Conservative economic policies of Ron Paul
References