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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: SunSunM who wrote (128365)10/10/2001 3:52:11 PM
From: pater tenebrarum   of 436258
 
KC, all past bubbles have in some form seen an element of governmental connivance. for instance, one of the first big bubble booms in modern financial history was John Law's Mississippi bubble, which was the first failed fiat money experiment (monetizing land inter alia, something the Fed now emulates by accepting agency bonds). it was the French government that made the bubble possible.
the South Seas bubble was set off by the British government...essentially, government debt was exchanged for stock in the South Sea company , and its directors assumed some 3/5ths of the governments debt.
similar to the internet bubble, it was the promise of untold riches in an undetermined FUTURE that served as the psychological backdrop egging on the speculation.
so it is a common feature of financial bubbles that they develop with the support of monetary and fiscal authorities - the Nasdaq bubble would simply not have been possible without the 'rate targeting' policy of the Fed.
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