Have Many Mini-Bubbles Created a Mega-Bubble?

A conventional, credit-financed bubble is, thus, a self-reinforcing feedback loop. In a credit bubble – with, for instance, purchases of stocks or real estate on credit – a buyer profits from rising prices, concurrently creating additional demand and so generating rising prices, by means of which he himself makes purchases on credit profitable – until the bubble bursts. Economic history is full of such bubbles: in 1635 there was a bubble in tulip bulbs in Holland; in 1720 the Mississippi and concurrently the South Sea bubble took place; around 1760 there was a boom in Prussia; around 1835 there was a land boom in the USA; and, one decade later, there was a railway boom in Germany. One could arbitrarily continue the enumeration – there were bubbles even in antiquity or in ancient China. Bubbles emerge as soon as there are developed markets in which payments are made with promises to pay. Early forms existed even in societies without developed markets (for instance, North American Indian tribes gave ever more copious gifts to each other, until they couldn’t be increased any more and the bubble burst. These bubbles weren’t based on credit claims but on their predecessor, the tradition of the time-delayed return present).