Bubbles by Chris Martenson Essay Example | Topics and Well Written Essays - 500 words

Bubbles by Chris Martenson - Essay Example The 2007 housing bubble is a recent example of a bubble that has affected the American economy and the rest of the world. The author has shown that although the bubble started way back in 1998, it was still never stopped. As the author narrates, bubbles have their way around with the people. In other words, people always tend to get tricked into believing that things will be different. Based on the video, it is obvious that bubbles can be avoided if people stopped being guided by the false illusion that â€Å"this time, things will be different.† In addition, in the United States, the Federal Reserve failed in its duty to protect the public against the housing bubble. Even when the signs of the bubble started to show, the Federal Reserve continued to lower interest rates. It was rather using researches to convince the public that the housing was not going to create an asset bubble. From this, the video points to the importance of having an effective central bank system in prev enting such economic catastrophes. In the United States, the Federal Reserve failed to act on the problem before it became too big.  Finally, the video shows that an asset bubble is just an indicator of a bigger problem. The housing bubble was just an indicator of increased borrowing. There was an increase in debt from $27 trillion in 2000 to $48 trillion in 2007. This shows how asset bubbles affect other sectors of the economy. In addition, bubbles are destructive because people/organizations tend to make the wrong investments.