What is a bubble economy?

Bubble economy refers to a macroeconomic state in which the value of assets exceeds the real economy and it is easy to lose the ability of sustainable development. Bubble economy is often supported by a large number of speculative activities, and its essence is greed. Because of the lack of the support of the real economy, its assets are as easy to burst as bubbles, so it is called "bubble economy" in economics. When the bubble economy develops to a certain extent, it often leads to the rapid decline of asset value due to the disillusionment of market expectations or the myth supporting speculative activities, which is called bubble burst in economics.

Bubble economy in all countries of the world

Three stages of bubble economy

The bubble economy can be divided into three stages, namely, the formation stage, the expansion stage and the collapse stage.

The origin of bubble economy

Virtual capital exists in the form of securities (including stocks, bonds and real estate mortgage bills), which can bring a certain income stream to the holders.

Actual capital is the material capital in the form of production factors and commodities.

There will be no bubble in the movement of production capital and commodity capital, because the movement of production capital and commodity capital is based on the physical form flow, and the corresponding monetary form flow is opposite and basically equal. Therefore, people think that the bubble economy originated from the movement of virtual capital, which is also the root of the bubble economy always originating in the financial field. In addition, as real estate, its special price composition makes land assets become an asset with virtual capital attributes. At the same time, the mutual penetration and integration of financial industry and real estate industry makes every economic bubble inevitably accompany the bursting of real estate bubble. Difference and connection between bubble economy and economic bubble

Difference and connection

There are differences and connections between bubble economy and economic bubble. Economic bubble is a common economic phenomenon in the market. The so-called economic bubble refers to some non-real economic factors in the process of economic growth, such as financial securities, bonds, land prices, financial speculation and so on. As long as it is controlled within a moderate range, it is beneficial to an active market economy. Only when the economic bubble is too much and inflated, which is seriously divorced from the needs of physical capital and industrial development, will it evolve into a false and prosperous bubble economy. It can be seen that bubble economy is a derogatory term, while economic bubble is a neutral category. Therefore, we cannot simply equate the economic bubble with the bubble economy. We should not only acknowledge the objective inevitability of the existence of the economic bubble, but also prevent the economic bubble from expanding excessively and evolving into a bubble economy.

objectivity

In the modern market economy, there are objective reasons for the long-term existence of economic bubbles, which are mainly determined by the duality of their functions. On the one hand, the existence of economic bubbles is conducive to capital concentration, promoting competition, activating the market and prospering the economy. On the other hand, we should also be soberly aware that there are negative elements in the false factors and speculative factors in the economic bubble.