Does Bubbles add real Value to economic growth?

[Wenbing]

Over the weeks, we have seen bubbles being created in the market by some powerful people such as Elon Musk.

For instance, he recently tweeted that he will be speaking on Clubhouse today regarding DODGECOIN. Adding this to the reditt marketing force.

I want to know if the bubble these economic agents create will add to the value of the economy.

You know bubble would also correct itself.

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[ashmodeus]

i try to understand how bubbles work on economic , and well , its like pyramid scheme i guess .
for example : person X bought doge at 0.5 cent price , then the price rise to 2 cent , and after that, person Y bought doge on that price , and a few moment later , price rise more to 5 cent , and the person X sell his doge at 5 cent price , and after X action selling his doge , the price down to 4 cent , then person Y reallized this is the limit i must take, then he sell it , and make the price go to 3 cent , then person A think probably a correction , then he join at 3 cent price.

well , probably i am wrong , but from that explanation, economic will growth for some reason.

[mk4]

For instance, he recently tweeted that he will be speaking on Clubhouse today regarding DODGECOIN.

All he said was that he's going to be on Clubhouse, he didn't say anything specific about it going to be about DOGE.

https://twitter.com/elonmusk/status/1355983231988862978

As for economic value, while I'm definitely not an expert, not really I guess? Bubbles just gives out publicity to that certain asset that's going through a "bubble" stage; and since they mostly correct in price in the end anyway, I think it just quickens the price discovery stage of that certain asset.

[davis196]

Nope,price bubbles don't add any value to the economic growth of any country.
Price bubbles in the financial markets are created by the central banks and their excessive money printing.
The connection between that financial markets and the real 'brick and mortar' businesses are non existent.
Stocks can increase it's price tremendously,even though the company,that issues those stocks isn't making any profits.Just look at Gamestop,for example.Does this add any value to the economy?Of course not.

i try to understand how bubbles work on economic , and well , its like pyramid scheme i guess .
for example : person X bought doge at 0.5 cent price , then the price rise to 2 cent , and after that, person Y bought doge on that price , and a few moment later , price rise more to 5 cent , and the person X sell his doge at 5 cent price , and after X action selling his doge , the price down to 4 cent , then person Y reallized this is the limit i must take, then he sell it , and make the price go to 3 cent , then person A think probably a correction , then he join at 3 cent price.

well , probably i am wrong , but from that explanation, economic will growth for some reason.

No,price bubbles aren't a pyramid scheme.Price bubbles are more like a legal market manipulation or a market distortion.

[slapper]

From my perspective, the economy is somehow positively affected by bubbles. By that I mean, bubbles do add real value to economic growth. However, the overall can show a different picture from an individual one. Many people might lose their money during this occasion while companies, firms, big players are the ones receiving huge advantages in various ways. But as long as the economic growth, Bubbles are still harbored and manipulated. Thus, just try to make as much money as you can with this scheme. Remember to be very careful because you can lose all of your money if you arbitrarily invest in extremely intense bubble

[Kittygalore]

From my perspective, the economy is somehow positively affected by bubbles. By that I mean, bubbles do add real value to economic growth. However, the overall can show a different picture from an individual one. Many people might lose their money during this occasion while companies, firms, big players are the ones receiving huge advantages in various ways. But as long as the economic growth, Bubbles are still harbored and manipulated. Thus, just try to make as much money as you can with this scheme. Remember to be very careful because you can lose all of your money if you arbitrarily invest in extremely intense bubble

I don't think so, bubble in economy means that a collapse is imminent and the poor will be the one that is going to get hit the hardest. If the big players doesn't get hit then there is no significant growth in economy because the money is not circulated properly. To be honest, if I were to prosper because a bubble will burst, I wouldn't accept it because a lot will be affected and I do agree about the bubble manipulation, but what I disagree is the part where you can lose money when you invest, it could be a half truth in my opinion because most of the big investors in bubble that are in the circle of the few are reaping big profits, and I do not like the idea of profiting from it.

[crwth]

I think the bubble is benefitting those who are rich already in the market, not the ones who have less. Not entirely though. I believe that in the market itself is going to be unpredictable with such people like Elon Musk being crypto inclined and we will never know what he's going to say next until it happens. I think it has real value but it would immediately be gained by other people though.

[aoluain]

Bubbles are created all the time in markets. It is a reaction to an event,
the event could be as simple as changing your profile on a Twitter account
[Elon Musk] without actually saying anything specific.

The latest Bubble was created from ~$32,000 up to ~$38,000. . . and
corrected back to currently ~$34,000.

The example above shows that there was a benefit to Bitcoin's price from
what Musk did, it doesnt always work that way though but in the current
Bull market climate many bubbles will be created and corrected but
over time the "Bubble" is inflating

[Gozie51]

I think it has real value but it would immediately be gained by other people though.

Real value how is that going to be when bubble is almost as a fake pump that trap investors. With that I think such trap discourage more investors which means volume will drop and marketcap. If that can happen then where is the real value.

[Wenbing]

i try to understand how bubbles work on economic , and well , its like pyramid scheme i guess .
for example : person X bought doge at 0.5 cent price , then the price rise to 2 cent , and after that, person Y bought doge on that price , and a few moment later , price rise more to 5 cent , and the person X sell his doge at 5 cent price , and after X action selling his doge , the price down to 4 cent , then person Y reallized this is the limit i must take, then he sell it , and make the price go to 3 cent , then person A think probably a correction , then he join at 3 cent price.

well , probably i am wrong , but from that explanation, economic will growth for some reason.

I see the economic modelling of bubble to produce the following results.

1. If initially growth was at 0.50%

2. With bubble the growth would probably rise to say 5.0%

3. The 4.5% increase will create some chain reactions.

4. But if we have a  correction of say 4.5%, the money in circulation will be wiped off.

So, economically I see bubble to have a net value of 0.

From my perspective, the economy is somehow positively affected by bubbles. By that I mean, bubbles do add real value to economic growth. However, the overall can show a different picture from an individual one. Many people might lose their money during this occasion while companies, firms, big players are the ones receiving huge advantages in various ways. But as long as the economic growth, Bubbles are still harbored and manipulated. Thus, just try to make as much money as you can with this scheme. Remember to be very careful because you can lose all of your money if you arbitrarily invest in extremely intense bubble

You know there are two types of economic growth in economic science.
1. Nominal GDP Growth

2. Real GDP growth.

If there is any impact that bubble could have on the economy is nominal because of inflated prices.

[moderator's note: consecutive posts merged]

[Hydrogen]

The term bubble is used by the media in the way that people scare children about bogeymen hiding under their beds or in closets. Its used to frighten, induce hysteria and influence public opinion.

If the powers that be want the price of something to decline, they call it a bubble. These remarks need not be true. Many will believe it. Many things which aren't bubbles, are called bubbles. While many real bubbles go unacknowledged and ignored.

Whether they add real value to economic growth is a long debated question. There have been many instances in recent history where the market caps of real estate and finance sectors have exploded. Some have pointed to this as indicators of real economic growth and value. While others have said they're indications of economic stagnation/contraction. Disguised by a mere expansion of balance sheets.

Today the quality and substance of the debate has declined even further. To a point where neither stance is commented on.

[oHnK]

I don't see Ellon tweeted that he will speak about the DOGECOIN on Clubhouse. However, talking about the price bubbles caused by the words of a powerful person does not give any added value to economic growth. Their words caused a change in the market, maybe it is true. But it means giving value to economic growth. The issue-induced boom is just like a game for the whales. Buy it at a low price and sell it at the top. Instead, I saw that this wave was just like an adult robbing money from a child. And the losers are the beginners just starting out in the crypto world.

[Wenbing]

~~~
 Many things which aren't bubbles, are called bubbles. While many real bubbles go unacknowledged and ignored.

Reading through your comment point out to me that there are possibly two kinds of bubbles, the real bubble and the unreal.

But, you didn't give examples as to which is the real bubble? If you can, that'll help everyone following the thread to learn.

[avikz]

Over the weeks, we have seen bubbles being created in the market by some powerful people such as Elon Musk.

For instance, he recently tweeted that he will be speaking on Clubhouse today regarding DODGECOIN. Adding this to the reditt marketing force.

I want to know if the bubble these economic agents create will add to the value of the economy.

You know bubble would also correct itself.

On papers! Yes, bubbles like this add value to the market but on papers! Some lucky people make some good amount of money out of such bubbles as well! However, if you talk about adding real value to the market, then it's a big no no!

People who are really active in the market, they always look for such news based opportunities, just like the real world stock market! These bubbles burst quite often which creates more opportunities!

[20kevin20]

What happens most of the time is... the rich cash out more, while the poor cash out less or nothing. Bubbles only create more FUD imo, which is unhealthy for the markets. Take Bitcoin or precious metals as examples: how do they affect other markets? When bubbles burst, it's usually throwing around a negative effect.

I cannot consider it adding value to economic growth when bubbles burst. They only do accelerate growth while they are created.

[Fesatmas]

By doing the bubble, this will only temporarily improve the economy, and even then it depends on someone who can place a position by buying at a low price before the bubble occurs. We know that many fell from yesterday's DogeCoin hike and there were artists who were also disappointed that they had lost around $ 150,000 buying at $ 0.08 ... so to reduce it, it would cost small traders in the crypto industry, especially Doge, nearly 50:50 losses and advantage.

[hatshepsut93]

There are two kinds of bubbles - the one's that go to zero or nearly zero, and the ones that keep growing after the crash. Bitcoin and some stocks are the second type. They can be overvalued at certain times, but they still create economic growth over long time.

The first type is just a zero-sum game where the money moves from late investors to early investors.

[magneto]

Not really. It's important to distinguish between real and nominal growth here.

Asset bubbles may trigger a short term increase in nominal wealth, but rarely does it translate into actual long term economic growth let alone development.

But that doesn't mean that bubbles are unnatural or even negative - it is a completely natural part of the human psyche to overreact to good news. In fact, assets which experience bubbles generally have at least some sort of underlying fundamental value and rapid price increases can often draw mainstream interest to it (think BTC in 2013).

[semobo]

Over the weeks, we have seen bubbles being created in the market by some powerful people such as Elon Musk.

For instance, he recently tweeted that he will be speaking on Clubhouse today regarding DODGECOIN. Adding this to the reditt marketing force.

I want to know if the bubble these economic agents create will add to the value of the economy.

You know bubble would also correct itself.

The bubble can make few people into very rich and all the others can go rekt so it is not doing any good things to the economic growth of society but can help an individual.But the scenario you are talking about is just a hype than a bubble because a bubble is riskier where the hype is just going to stay for a very short time and not everyone will fall into such traps.

[KEN H]

Price bubbles do not increase real value.
It is the part that exceeds the value of the thing itself.
The bubble will burst sooner or later.
The disadvantages of foam breaking outweigh its benefits.

[youdacapt]

Regarding Musk action as regards club house; i think it is more than just a bubble; its a proper well thought marketing action; Musk having a clubhouse room on crypto currency means that there will be new clubhouse users; several subscriptions; and application usage and that means great revenue and price turnover for clubhouse owners; it is more than a bubble; it is a genuine economic growth.  Atleast to my understanding

[redsun114]

Over the weeks, we have seen bubbles being created in the market by some powerful people such as Elon Musk.

For instance, he recently tweeted that he will be speaking on Clubhouse today regarding DODGECOIN. Adding this to the reditt marketing force.

I want to know if the bubble these economic agents create will add to the value of the economy.

Well, it’s already doing that ,it’s adding value and when it’s all over the value will still drop to a lower rate. Nothing much, everything is like a pyramid, everything in the world I guess, even the currencies we have. They say it’s based on supply and demand, so as long as people continue to believe in that particular asset or money, it’s going to keep growing.

In the case of Dogecoin, a situation like this will likely be creating more awareness for it, since I hardly sees anyone talking about Dogecoin, but with all these bubbles it has been able to gain the interest of public and everyone is now talking about Doge, which means, definitely, that a lot of people are heading towards it.

[bluebit25]

But if you're talking about a little problem during a big event, let's look back at the reasons why it did. Is the profit that many have in your opinion is lucky? I believe not, since the final goal of these people is unknown, we will encounter more events like this.

[Coyster]

The Bubble you're referring to is in the area of cryptocurrency I guess, and you're equating it being able to provide growth in the traditional economy, this isn't possible. Having said that, if it's simply based on cryptocurrency value/growth, imo, hype is what results in a Bubble most times, when certain individuals or sporadic appreciating price movements causes an Influx of Investors into a network, it usually causes a spike that's most times called a bubble when it actually dumps, imo, it can add value in the sense that it increases the demand (investors) for such coin, and if it does maintain it's value and doesn't plunge, then it wouldn't be referred to as a bubble.

But most often than not, it crashes/dumps, then people make assertions that 'the bubble has burst', that way it fails to add real value to the growth of the particular network, Bitcoin was once touted to be a bubble initially when the price started to appreciate, but after a period of sustained development, it's now overperformed to be called that anymore, that would have been the case of most coins that have been called bubbles if they didn't 'burst'/dump.

[Hydrogen]

~~~
 Many things which aren't bubbles, are called bubbles. While many real bubbles go unacknowledged and ignored.

Reading through your comment point out to me that there are possibly two kinds of bubbles, the real bubble and the unreal.

But, you didn't give examples as to which is the real bubble? If you can, that'll help everyone following the thread to learn.

https://www.youtube.com/watch?v=HQ79Pt2GNJo


It helps to know experts and analysts warned about a real estate bubble in US markets as early as 2005 (see above). Roughly 3 years before the subprime mortgage crisis and global economic crisis of 2008. US treasury secretary (at that time) Henry Paulson said "no one could have predicted this disaster". Even though analysts and experts had predicted it for 3 years prior.

I guess that is one example of a real bubble. Which official institutions typically turn a blind eye to and refuse to acknowledge exists.

There may be similar bubbles today. But experts and analysts no longer discuss real bubbles as they did in eras past.

Discussion relating to bubbles now usually amount to no more than media hysteria, gaslighting and blind outrage.

[Wenbing]

By doing the bubble, this will only temporarily improve the economy, and even then it depends on someone who can place a position by buying at a low price before the bubble occurs. We know that many fell from yesterday's DogeCoin hike and there were artists who were also disappointed that they had lost around $ 150,000 buying at $ 0.08 ... so to reduce it, it would cost small traders in the crypto industry, especially Doge, nearly 50:50 losses and advantage.

You know I actually speculated that Dogdecoin will rise when Elon Musk was about speaking at Clubhouse. I didn't just speculate, I bought at 0. 04047.

It later turned out that Elon's comment about the coin couldn't cause it to rise. I made a loss before selling of. That's how people lost money during bubble.

Regarding Musk action as regards club house; i think it is more than just a bubble; its a proper well thought marketing action; Musk having a clubhouse room on crypto currency means that there will be new clubhouse users; several subscriptions; and application usage and that means great revenue and price turnover for clubhouse owners; it is more than a bubble; it is a genuine economic growth.  Atleast to my understanding

Yes,  Elon Musk Clubhouse event had two impacts on two entities.

1. Clubhouse: just as you said, this is a strategic marketing strategy for Clubhouse. It's a form of leveraging on the influence of Elon Musk to grow the userbase. In fact the rooms were full.

2. Crypto : He said he Support bitcoin. That created a bubble that led to the increase in the price of btc.

We are actually concerned about the impact of 2 on economic growth.

[moderator's note: consecutive posts merged]