It Was a Bubble: Animal Spirits Nothing More and Nothing Less

It appears the housing boom/bust in America was nothing unique. It was global. Doesn’t that make every attempt to try to explain, understand and rationalize the U.S. housing debacle pointless? Doesn’t it also reinforce the idea that there is only one proven way [hint: trend following] to prepare for and take advantage of unpredictable bubbles?

Source: Robert Shiller book cover.

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One thought on “It Was a Bubble: Animal Spirits Nothing More and Nothing Less

  1. There is no doubt that human emotions drive bubbles, but we should not underestimate the influence that Central Banks (like the FED) use to make these bubbles even more dangerous and extreme than they would otherwise be. When you have a bunch of soviet style bureaucrats artificially setting the price of something (in this case money/credit) you get imbalances that would not exist in a free market. The FED has systematically UNDERPRICED credit resulting in (surprise!) overconsumption of credit to fund unproductive activities (i.e. an unsustainable bubbles). We are now facing the consequences….

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