This chapter talks about “bubbles”, which in economic discourse implies an image of a mania or process in which a price or prices are continuously bid upward in a frenzied spiral. One example ofan economic bubble was the Japan case, wherein real estate at the end of the 1980s caused a severe debt crisis in the Japanese banking system and economic stagnation. However, even with negative implications and bad press, “bubbles” are considered useful. The chapter concludes with an attempt to prove the advantages of “bubbles”, focusing on why bubbles happen and what their building blocks are.
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