The Four Causes of Speculative "Bubbles"

Why does some technology lead to guess while others are not there? Why early broadcast producers and broadcasting stations, "aircraft" manufacturers and airlines, shops at the Internet, electronics makers, electric car manufacturers and transcontinental railroad companies stock speculative bubbles, but laser, northeast railroad, antibiotics Substance, nylon, rayon, cellophane or television. Our work is aimed at fixing important methodological flaws in current speculative crisis research. We can not identify the cause of the bubble by examining a single case.

A speculative bubble is an increase in asset value in a particular industry, product, or asset class. A speculative bubble is usually caused by an exaggeration of expectations for future growth, a rise in prices, or other events that may cause an increase in asset value. As more and more investors surround the anticipated growth, the number of buyers surpasses the seller and boosts the price beyond the intrinsic value Objective analysis (Investopedia) As such, the price will be like a bubble maybe. For the sake of brevity, we ignore this technologicality; I insist that we are currently experiencing speculative bubbles, due to my expectation of current and future price actions . I now break down the reasons for this situation and propose some basic predictions about how to work.

The tulip of the 1630s was born in the Netherlands and is known today as a bubble of tulip in the Netherlands. Based on the background, it is estimated that the price of tulip rose 2,000% in 4 months and then declined 99%. In the latter half of the 1980s, Japan's massive economic stimulus measures disrupted the economy and brought about extensive speculation. From Investopedia: "At the peak of the real estate bubble in 1989, the value of the Imperial Palace in Tokyo exceeded the value of real estate in Tokyo, after which the bubble soared in early 1990." This is a real estate bubble in Japan It is known as a stock.

To some extent, we all realize that the direct cause of the crisis is the collapse of the US real estate bubble. However, people rarely find the origin of the foam itself. Why did consumers suddenly start excessive speculation in the real estate market? What is the cause of the tide of this large new real estate? To explain this, we need to learn again from the Austrian business cycle theory. Short note: Austrian economists believe that interest rates are as meaningful as other prices. When interest rates are freely determined in the market, it conveys information about the amount of savings needed to achieve an entrepreneurial investment plan. However, if the central bank overflows the market with new funds that are not in contact with the actual funds, the interest rate will artificially decline as a result. Entrepreneurs are misunderstanding these artificially low interest rates as signs of more resource protection than actually exist.