[digitaltrees]

Bitcoin is a good example because many people view it as an alternate to fiat currency that is “manipulated” by central bank monetary policy. Yet human psychology created a boom and a bust. We are talking about the history of asset bubbles and misalignment of capital. Why are bitcoin and beanie babies excluded examples of asset bubbles in your mind? They seem to show that People do stupid things regardless of monetary policy

My point is there is no one factor that is primarily responsible for all bubbles. There may be similar sets of factors that reoccur, but to say that monetary policy emerges as the singular most important factor throughout history doesn’t seem to me to be defensible.

Post-WW2 was a unique context because vast amounts of capital were being used to literally rebuild Europe. The US was basically the only manufacturer of scale, so I make sense that there wouldn’t be an asset bubble when there were vast numbers of projects that required capital and that were economically and financially stable rather than hype driven.

I will have to think about Japan as an example, I haven’t read the history in quite some time, I am definitely open to it being an example of a bubble cycle driven by monetary policy. My impression was that trade with the US and demographics seemed to be more a driver but I’ll look into it and post if I am persuaded.