

What past bubbles can teach us about the one that just burst - ksvs
http://www.commentarymagazine.com/viewarticle.cfm/speculators--politicians--and-financial-disasters-13180

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jwesley
Nothing.

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Retric
I don't think the specifics of past bubbles repeat, but you can still learn a
lot about human behavior from such events. I have long speculated that cycling
interest rates over time 3 - 4 - 3 - 4 etc would help curb the creation of
bubbles as minor shocks would drive up cash reserves.

In a bubble people increase investment and risk, but they also decrease
efficiency. In a down turn people increase efficiency at the cost of avoiding
useful risks. Both are useful and both are damaging when they stretch out over
time.

The last bubble popped because they raised interest rates way to fast at the
same time oil went sky high. Getting people to live in smaller homes has long
term benefits to the economy but few people want to live in small houses. etc.

