Bubble Economy
Often referred to as a market bubble, it is the spectacular growth or rise in prices of certain items due to excessive speculation. When people engage in speculation, they push up prices by making purchase decision out of sync with the intrinsic values of the item whether it is land, stocks, currencies or anything that is traded. This is a cause for great concern by the economists and government leaders alike since excessive asset prices not correlated to the intrinsic values can make people lose their shirts. This separation of the correct price from the actual “real” price based from demand and supply alone can make people to make irrational choices and pay prices far above what an item is intrinsically worth. The crash that follows a bubble bursting is usually very painful financially since wealth is destroyed and results in a misallocation of much needed resources.
Living In The Captive World