Observation

"Pilate saith unto him, What is truth? And when he had said this, he went out again..."

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Location: Tampa, FL, United States

Friday, March 06, 2009

The Next Bubble

The dot.com bubble burst, the housing bubble burst, so what's next? Assuming the economy recovers, all the money the fed is printing (see graph) and dumping into it will eventually lead to some nifty inflation. (Infaltion is truly money printing and distribution. The subsequent increase in prices and wages is the result of the inflation). The herd mentality that led to the previous bubbles will likely lead to yet another bubble, and bubbles do one thing after floating for a bit--pop--just like weasel.

The health care industry is one candidate for bubblization. It already has some characteristics of a bubble industry in that it gets a lot of easy third party money. When money is had easily there's a tendency on the part of workers to lose the competetive fire that typically drives entrepreneurs in their small business universe. As witnessed by high prices, health care industries understand they're propped up, unlike most small businesses which operate much like a high-wire act in comparison.

If Obama slaps the free market upside the head again, like Chris Brown did to Rihanna, and dumps billions or trillions of dollars into health care entities specifically it will certainly attract investors into ancillary businesses until the industry at-large shows too many signs of being completely socialized. Once that happens the bubble will burst. And if and when the health care bubble bursts that means its product becomes somewhat similar to today's banking institutions.

As kids we all loved the big bubbles. When one blew bubbles it wasn't long until he or she only tried to blow the huge ones. That's our nature. Bigger is better. And we all knew the big bubbles (3-12" in diameter) were short-lived and more precarious. Shorter-lived and less stable than the ones that were 1/2" in diameter. The feds' policy of fiat currency, interest rate manipulation and market tinkering is a veritable bubble bath.

Bubblery eventually gives way to slavery because its anti-private property rights to the core. It's a shame neither major political party nor the peasants with pitchforks have the willingness to challenge its politicans about the feds' very existence. Be wary the bubbles.

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