What causes economic bubbles? - Prateek Singh
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During the 1600’s, the exotic tulip became a nationwide sensation; some single bulbs even sold for ten times the yearly salary of a skilled craftsman. Suddenly, though, the demand completely plummeted, leaving the tulip market in a depression. What happened? Prateek Singh explains the peak of a business cycle, commonly referred to as a mania.
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Based on what you have learned in this lesson, in what conditions can an economic bubble arise? What do you think is happening in the world economy today? Would any of the terms from this lesson be applicable?
Comments are closed on this discussion.
Garv Goyal
Lesson completed
In the world economy today, economic bubbles are mostly related to the demand of an entity as well as the mindset of buyers. If a buyer thinks something is going to go up in value in the near OR late future, then the buyer will buy the item and tell others to do so. In most cases, the buyer has caused "unnecessary hype" for a somewhat ordinary object. Due to the rises in demand, the object's price will go up, and then eventually crash when everyone agrees together that the object is not worth as much as it is selling for. Overall, supply, demand, and the mindset of buyers all can cause (and end) and economic bubble.
Layla Hines
Lesson completed
I think when the demand for something goes up an economic bubble happens. There is a lot of economic bubbles happening. Yes, especially for needed things (gas, food, and, even water.).
Harry Connerty
Lesson in progress
I think what is happening in the world economy today is caused by demand as needed and demand as a result of rising prices.
우진 서
Lesson in progress
I think the bubble is caused by demand as needed and demand as a result of rising prices. The first demand for need is literally the demand for people's needs. The second demand, however, is to increase demand in order for many people to benefit from the rising prices of demand. It is likely that the real estate phenomenon in our country today will be seen as a bubble phenomenon.
Much demand for real estate has caused prices to rise, in which many people buy real estate for profit rather than for actual use
Ana Fuertes
Lesson completed
As I see it, an economic bubble can arise if market leaders decide it. What I mean is that in our society people can easily be influenced. As a result, many people is able to pay for a product far from it is worth.
If advertising, social media and other inputs decide to highlight a product, people is going to “need” it. Soon enough, the demand of the product rapidly increases.
The economy in our days is determined by the technologies. The bubbles arise and burst periodically. It is very easy to predict, because they are cyclic, and of course because there are not casual or accidental.
Riki Shibasaki
Lesson completed
In my opinion, economic bubble occurs particularly when something is shortage. For example, today we are restricted due to coronavirus pandemic. We need to wear masks all the time when we go outside. Just 10 months ago from now, masks are not enough to provide all the people in Japan. The shortage was not only masks but also toilet papers and sanitizer. I think that the condition is really similar to that of tulip mania. After the deficiency of them, the demands keep increasing even now. That phenomenon is definitely a "mania".
Kay Plucker
Lesson completed
I feel that people are always on the look-out for the next big thing, hoping to get in on the ground floor and ride the elevator to the top prices. People were burned in the .com bust of the 90s and some learned that to invest in the stock market is a long-term strategy. Some however, will always chase the peaks and get burned in the valleys.
ALTIN GOGA
Lesson completed
When the people are demanding something a lot and are being supplied it. I don't believe we will be entering a bubble anytime soon due to the fact majority of people can't even pay rent which means they won't be demanding anything besides necessities. Yes terms from this lesson can be applicable.
SeoYeon Kim
Lesson in progress
An economic bubble can arise when there is excessive enthusiasm for a particular product and its value rises to a few times more than its intrinsic value. As mentioned in the lecture, people are very interested in the growth of a particular company. Expectations for growth and press releases revitalize the stock market and boost stock prices. However, if a company is not capable of reporting performance against expectations, it may know that a value greater than its intrinsic value has been applied. So, the terms in this lecture can be applied today and will continue to apply to the global economy.
Ko Su Hwan
Lesson completed
but when people's interest begin to change, BOOM!