Of Interest


Tuesday, April 23, 2013

Asset Bubbles 'Pop! Go the Weasel' A Visual History

Bubbles are a reflection of humans' herding behavior carried out to periodic extremes, or expressed differently, they are momo investments on steroids.

Maybe not all, but certainly the vast majority of the most popular asset bubbles since before even the Tulip Mania of 1637 (including the Kipper and Wipper currency debasement of the German 30 years War, circa 1621, which is appropriately enough deja vu in contemporary retrospect, only the war is missing). Its worth noting that all the bubbles to the right of center have been central-bank induced (except for that amulet bubble of 2006, although even that is likely debatable), I will not note it as it is quite obvious even without me highlighting this simple fact. One can only imagine what would happen to asset prices - all of them - when the world's central banks, which are now collectively and voluntarily "all in" on reflating the biggest asset bubble of all time across all asset classes, decide to close the liquidity spigots (if ever).
Perhaps I should also mention to add the youth unemployment bubble of Spain and Greece? The invalid pension bubble of the USA? I was also going to say the firearms bubble in the USA until I remembered that that might come in handy for popping the government bubble.
The fall of the Roman Empire up there when the middle class was driven out of the city by taxation and into the welcoming arms of Alaric appears to be  a) it’s happening again now and b) we will get the same result.

Check out one of the best books on the subject : A Short History of Financial Euphoria.
Another one on the biggest bubble of them all - the rise of private credit creation and fiat money - is called "Web of Debt" by Ellen Brown.
 and so 'Pop! Go the Weasels'...thanks to the banks.  I'll stick with things that I can hold...

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