A bubble refers to an economic term where the price of trading does not match its real value. The term mainly relates to prices expanding based on nothing but air.
Four notable examples of bubbles exist:
- South Sea bubble, when stock in British companies trading in South America became inflated.
- Tulip mania, when stock in the Dutch bulbs suddenly inflated.
- The Wall Street stock market crash, often referred to as the day the bubble burst. This precipitated the Great Depression.
- The subprime fiasco, when the major finance houses and banks failed. This was triggered by the reversal of protective measures put in place during the Great Depression. This occurred during the administration of President Clinton due to pressure and lobbying from the financial community.
In late 2017, Bitcoin became another candidate for a bubble.
Read more about bubbles over at LinkedIn here.