4 ms·

Does anyone have any recommended background reading on how bubbles and "time bombs" work? Why don't these things behave according to normal price supply demand

Does anyone have any recommended background reading on how bubbles and "time bombs" work? Why don't these things behave according to normal price supply demand curves where the price would slowly come back down to earth over time. I've seen this repeat time and time again across certain assets, and always being curious about the underlying mechanisms.

SoftTalker 3y ago
People who are invested in these things are motivated to prop up the prices for as long as they can, until they can't and the bottom drops out. It's not a normal supply/demand curve because the demand is not just lower, in a lot of cases it's gone and not coming back at any price.
- freedude 3y ago
  Exactly! In these cases it becomes apparent the market isn't free but manipulated in some way (Socialism, tariffs, tax benefits, regulatory measures).
freedude 3y ago
The problem with bubbles is you cannot know there was one until it bursts. Then and only then can you see the effects of it. Until then it is merely conjecture based upon delayed information. Here are some searches I have benefited from reading. https://mises.org/search-mises?search=bubble https://mises.org/search-mises?search=bubble https://brownstone.org/?s=%22financial+bubble%22 https://brownstone.org/?s=%22financial+bubble%22 https://swisscows.com/en/web?query=%22financial+bubble%22+site%3Azerohedge.com https://swisscows.com/en/web?query=%22financial+bubble%22+si...
voz_ 3y ago
Because those curves are a psuedo-mythological abstraction - a lot in life does not actually work that way.