Definition of economic bubble, what is bubble economy

Excessive growth of virtual capital.

A bubble economy refers to a macroeconomic situation in which the value of assets exceeds the value of the real economy, and it is easy to lose the ability to sustain development. Bubble economies tend to be supported by a lot of speculative activity, and due to the lack of support from the real economy, their assets tend to burst easily, hence the name bubble economy.

The bubble economy is often accompanied by the ups and downs of commodities, but the bubble economy is not the fluctuation of commodities in the general sense, but refers to the fundamental changes in the value of commodities after excessive concentration of social capital and excessive speculation caused by repeated sales of the same commodity.

For example, the big wolf and the Yan group are both selling baked cakes, one day, they began to buy each other's baked cakes, buying and buying to raise the ** from 1 to 50, people in the market saw that the price of the baked cakes kept rising, so they joined in a swarm, resulting in the crazy rise of the baked cakes, a baked cake worth only 1 yuan, sold alive to hundreds of yuan, and some people believe that it will go to **, this is the bubble economy.

Bubble economy refers to a macroeconomic state in which the value of assets exceeds that of the real economy and it is easy to lose the ability to sustain development. Bubble economies are often propped up by a lot of speculation and are essentially greedy. Due to the lack of support from the real economy, its assets are as easy to burst as bubbles, so it is called in economics"Bubble economy"。

When the bubble economy grows to a certain extent, it is often due to the bursting of market expectations or myths that support speculative activity, resulting in rapid asset value, which is known in economics as bubble bursting.

The "bubble economy" refers to a false boom characterized by the unconventional nature of real estate, and its direct cause is unrealistically high earnings expectations and widespread speculative frenzy.

To put it simply, in order to form a bubble, there must be a period of irrational prosperity in the market, which supports the market to reach a very dangerous height. Therefore, the formation of a bubble requires a series of boosting factors, like the wind to push the bubble higher and higher, this mechanism is discussed by Professor Shearer, a Nobel laureate economist in "Irrational Exuberance", which he calls a feedback loop. "Feedback loops" are also known as self-actualization, herd effects, vicious circles, etc.

The existence of this phenomenon in the financial market has been discussed for a long time, but because it involves the transmission of social psychology, it is not a natural scientific phenomenon, and it is more difficult to accurately describe and define it.

The simplest way to understand it is the MLM economy.

If you look at the present, all the services you see are in the service industry, and none of them are producing new products. The only apples produced are still OEM.

Now the whole society, including real estate, is a consumer economy, which is the bubble economy.

For example, the big wolf and the Yan group are both selling baked cakes, one day, they began to buy each other's baked cakes, buying and buying to raise the ** from 1 to 50, people in the market saw that the price of the baked cakes kept rising, so they joined in a swarm, resulting in the crazy rise of the baked cakes, a baked cake worth only 1 yuan, sold alive to hundreds of yuan, and some people believe that it will go to **, this is the bubble economy.

Bubble economy refers to a macroeconomic state in which the value of assets exceeds that of the real economy, and it is easy to lose the ability to sustain development. Although the bubble economy appears to be growing on the surface, this growth is not sustainable, and it often bursts after a certain degree of development.

Although national income will also grow in the bubble economy, if it stagnates or bursts, it will be harmful to economic development.

Economic development is best based on normal demand and investment, and too much pursuit of economic growth is often counterproductive.

1. Bubble economy: refers to the macroeconomic state in which the value of assets exceeds that of the real economy and it is easy to lose the ability to sustain development. The bubble economy is often supported by a lot of speculative activity, and the essence of the bubble economy is greed.

Due to the lack of support from the real economy, its assets are as easy to burst as bubbles, so it is called the "bubble economy" in economics.

2. Bubble bursting: When the bubble economy develops to a certain extent, it often leads to the rapid development of asset value due to the bursting of market expectations or myths that support speculative activities, which is called bubble bursting in economics.