We are heading into a bubble economy and there is one that is about to pop.
ChatGPT suggests that a financial bubble is:
A financial bubble is a situation in which the price of an asset, such as a stock or a commodity, becomes artificially inflated due to excessive speculation and investment. This can lead to a situation where the market becomes overvalued and eventually collapses, resulting in significant losses for investors. Bubbles can occur in a variety of different markets and can be caused by a number of factors, including low interest rates, economic growth, and investor sentiment.
Let's take Tesla as an example.
Tesla CEO is Elon Musk, who purchased Twitter last year and believed the company can help Tesla to make more profits.
Does it? Or he tried to inflate Tesla instead?
If you go to Twitter, there is less opposition than a supporting voice.
Elon Musk sells Tesla cars and Tesla stocks.
People purchase cars to help pump the stock price and when stock price goes up, people want a new Tesla.
Despite all the bad reviews about the car and its questionable autopilot feature, Tesla cars sold quickly and stock goes up no question.
Is this a Ponzi scheme?
Similarly, cryptocurrency is also highly speculative.
It goes up a time to time, but people buy the narrative without further investigating how useful the crypto really is.
What if people stop buying the crypto, will that still go up?
What if the economy is so bad and the interest rate is high that people have less money to buy more crypto?
We will see how it goes.
Photo by Pawel CzerwinskiUnsplash
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