> Note: I'm not an economics expert by any means, so go easy on me :) That's fine - I have a degree in economics, so let me take a stab at explaining this! >

> Note: I'm not an economics expert by any means, so go easy on me :) That's fine - I have a degree in economics, so let me take a stab at explaining this! > why in situations like this, governments tend to intervene? In the long term, wouldn't it actually be better to let the market just naturally figure itself out? As Keynes said, "In the long run, we're all dead". The problem is that the "long run" doesn't actually correspond to any specific duration of time or point in the future; it describes the aggregate, idealized behavior over time. There may actually never be any point at which the trading price of $XYZ[0] actually matches the underlying value, as long as the price over time tends to track the fundamental value[1]. On the other hand, an overfocus on optimizing for the short term causes stunted economies that never reach their full potential (in the best case) and a downward spiral with a negative feedback loop (in the worst case). > That way the end prices reflect the real value. By the way, there's actually no such thing as the "end price", because nothing happens in a vacuum. Let's say Google launches a new product today. It may take two years to figure out whether or not that product is going to be a success[2]. If they did nothing else in that time, then yes, there would be an "end price" after this event, but the real world is a series of overlapping events that are all playing out simultaneously[3]. So the market never has the chance to converge towards the "end" value after event A, because by that time, events B, C, and D are all having an effect on the system as well. That doesn't mean that A's effect is negligible; it just means that it's never observed directly. [0] By the fundamental theorem of calculus we would be guaranteed this at one moment, but prices aren't actually continuous so this doesn't apply [1] The fundamental value, of course, can never be directly observed, as is often the case in statistics. [2] Or even ten years, if we're talking about self-driving cars. [3] The word "event" here is a technical one, not a colloquial one: https://en.wikipedia.org/wiki/Event_study https://en.wikipedia.org/wiki/Event_study