Why the Bubble Economy Isn't the Real Economy | Dusty Wunderlich \ stacker news ~econ

Why the Bubble Economy Isn't the Real Economy | Dusty Wunderlich mises.org/mises-wire/why-bubble-economy-isnt-real-economy

2161 sats \ 21 comments \ @Undisciplined 2 Mar econ

zaps forwarded to @siggy47 (10%)

Many of the high-flying businesses that received massive publicity turned out to be the creation of a bubble economy. Not all businesses are flashes in a pan; many of them continue to serve as the backbone of our economy.

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665 sats \ 4 replies \ @grayruby 2 Mar

One of the most nefarious elements of finger on the scale central planning is it inherently favours businesses of scale that can borrow and crush competition essentially free capital, and decimates small businesses that can't afford to compete with the juggernauts that sit next to the printer.

299 sats \ 3 replies \ @Undisciplined OP 2 Mar

Plus, they convert that money into political favors that they redeem for increased barriers to entry for potential competitors and regulations that smaller competitors can't afford to comply with.

148 sats \ 2 replies \ @siggy47 fwd 2 Mar

Thanks for the forward, and thanks for keeping these mises.org articles flowing!

204 sats \ 1 reply \ @grayruby 2 Mar

It's like an Undisciplined coin air drop.

50 sats \ 0 replies \ @siggy47 fwd 2 Mar

Hey! I remember those things.

310 sats \ 11 replies \ @davidw 2 Mar

Not sure why but I enjoy reading about prior bubbles. Here's a decent write-up of the dotcom bubble: https://ideas.ted.com/an-eye-opening-look-at-the-dot-com-bubble-of-2000-and-how-it-shapes-our-lives-today/

It became a joke that the dot-coms that started out promising a grand vision of a more efficient way of doing business were — almost to a company — unprofitable.

Feels to me like we're about to embark on a new bubble of epic proportions. At least that's what my gut tells me. It's surely the ultimate fate of AI is it not, for irrational exuberance to drive up the value of stocks, before it gets renamed to something not "artificial"? The internet was the Information Superhighway & cyberspace before it's name stuck. We have yet to see something similar with A.I. There is still scepticism about its impact and that to me shows the bubble has really yet to get going.

149 sats \ 1 reply \ @Undisciplined OP 2 Mar

The example that always comes to mind for me is doorknobs dot com, which had a market cap greater than the entire value of the doorknob industry.

I'm not aware of any examples like that currently, but I'm sure they'll show up.

149 sats \ 0 replies \ @davidw 2 Mar

Love that datapoint.

Completely unrelated but reminds me of https://nobsbitcoin.com. I can’t stop myself reading it as nobs-bitcoin, instead of no-bs-bitcoin 😅

30 sats \ 8 replies \ @grayruby 2 Mar

Damn you just shot up the ranks. What black magic is this you wield?

80 sats \ 0 replies \ @davidw 2 Mar

Ignorance is bliss. Wish I knew

50 sats \ 2 replies \ @Undisciplined OP 2 Mar

Clearly someone important zapped him.

We can really see how important the quality vs quantity calculus is in the rankings. Last I checked, every one of my numbers was higher than elvismercury's and yet he was ahead of me.

30 sats \ 1 reply \ @grayruby 2 Mar

I think it is weight based on the top posts and how early you are zapping and commenting. So he zapped and commented on SN Newsletter first and it is now the number 1 hot post so I think that works in his favour. Since we don't have many days of data I think it is like an average in baseball early in the season, it can swing much more wildly than after you have a 100 ABs under your belt.

50 sats \ 0 replies \ @Undisciplined OP 2 Mar

"It's a marathon not a sprint." "Slow is smooth and smooth is fast." etc.

10 sats \ 3 replies \ @arrivederci 3 Mar

Politely suggest you keep this chatter to places like the saloon. Many (most?) of us are not interested in rankings and it's definitely off-topic here.

0 sats \ 2 replies \ @Undisciplined OP 3 Mar

Just scroll past the comments if they don't interest you.

10 sats \ 1 reply \ @arrivederci 3 Mar

Sorry, but it's an entitled attitude to think you can make off-topic comments under a post and then just say "everyone else can scroll past them"

0 sats \ 0 replies \ @Undisciplined OP 3 Mar

Well, it is my post, so I do feel entitled to permit such comments. You're welcome to downzap them if you want to imprint your preferences on the feed and send comments you don't like to the bottom.

106 sats \ 3 replies \ @gnilma 2 Mar

I wonder how much of the bubble does bitcoin fix? When the world moves onto a bitcoin standard, where value cannot be created out of thin air, by fiat, and every investment requires forgo consumption of capital, skin in the game would kick in. Naturally, one would think that a lot of misallocation of capital and bad investments would be gone, due to skin in the game and elimination of money printing. Yet, human make mistakes all the time and bitcoin will not prevent people from investing in bad ideas.

I guess to answer my own question, under a bitcoin standard, bad investments will be punished and good investments rewarded. Over time, it goes through a sort of Darwinian process where the ones with an eye for good investment will thrive and continue to thrive, while the ones that make bad investments will run out of capital. No more printing money, QE, or whatever they call it to paper over and bail out the bad investors just because they are close to the money printer. What do you think?

50 sats \ 2 replies \ @Undisciplined OP 2 Mar

The Austrian view is that bubbles need an artificial expansion of credit to form. Any other types of mistakes will be distributed randomly over time, rather than occurring simultaneously.

30 sats \ 1 reply \ @gnilma 2 Mar

So being on a bitcoin standard essentially eliminates bubbles because there is no artificial expansion of credit, which is required for bubbles to form. At least that's the Austrian view.

21 sats \ 0 replies \ @Undisciplined OP 2 Mar

There are a lot of differences of opinion of whether and how much artificial credit expansion we'll see on bitcoin. You could think of scams like FTX as having done exactly the kind of thing that creates bubbles.

I do think the bubbles will be smaller on a bitcoin standard, but I think they'll still happen occasionally.