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I strongly suspect the correlation between the rise of the Tech and Housing bubbles didn't have nearly so much to do with the rules or the bankers as it did wit
by roc 17y ago
I strongly suspect the correlation between the rise of the Tech and Housing bubbles didn't have nearly so much to do with the rules or the bankers as it did with the enormous influx of 'retirement fund' money that desperately wanted somewhere to go.
With so many small-time, long-view investors putting blind trust into the hands of big-time, short-view fund managers/brokers/CEOs, the situation was inevitable.
And the only correction that will change things, is retirement money leaving the stock market and becoming a whole lot more skeptical. Plugging regulatory holes doesn't even help; as we've seen, effective regulation just gets stripped away as soon as it's politically feasible.
- jswinghammer 17y agoThe Austrian theory of the business cycle explains why these bubbles occur. It states that when there is inflation via credit expansion that the sectors that attract that increased credit are in the higher orders or production that are more capital intensive. The inflated prices end up in areas like housing or the stock market. If you stop the inflation then you won't get any more bubbles assuming of course the theory is correct.
- clistctrl 17y agoThat is a very interesting theory, it makes a lot of sense.