There have been 3 bubbles since human being found out the trick of pumping up the economy with "fiat money". After all, human can create unlimited amount of "fiat money". That is a very powerful weapon.
(1) The first bubble: to build the internet
In the late 1990's when "internet" was first introduced to the public, human realized this to be something that the whole race would have use for. How do we get to develop and build all the infra-structure? Easy, we have unlimited money . Don’t we?
So we gave the “internet industry” as much money as they want. Basically, anyone who started up any business with the name “telecommunication”, “ fiber optics”, or “dot com” will be endorsed with plenty of money to do the work.
When the bubble bursted, many indiviuals got hurt, but to the whole society, the mission was accomplished. The whole internet infra-structure was well built up and more.
(2) The second bubble: to build housing
Everyone wants to have his or her own home, right? After all, isn’t that the American dream? Housing is an easy target after we desperately need another bubble to pump up the economy. So we started to put all the money into housing. We finally reached to the point that, a person without a job and without a downpayment can also buy a house…well, all it takes is fiat money, and that we have unlimited amount.
After the housing bubble bursted, many individuals got hurt. But who cares? The society can sacrefice as many individuals as possible up to the point that the society stays intact.
Now we have built so many houses…more than we need. See? We hace accomplished a lot !
(3) The third bubble: to provide social programs and entitlements
All poor people should be taken cared of and provided a good life. After all, that is basic human right to live in dignity, right?
So we started to build government social programs , to help the poor, to feed the needy. After all, all it takes is fiat money, which we do have.
Actually, that bubble is about to burst. Greek, Ireland, Portugal, California,…one by one, many governments are facing big budget troubles. Just like that dot com company who grabbed 5 million dollars but did nothing useful. Or that jobless guy who bought a house, and stayed home everyday watching TV. The people of those governments are living a life that they can not afford.
When this bubble burst, again, most individuals would get hurt badly.
Comments