Here we are folks, Economics-101, yea, you should have paid attention in class and studied when you had the chance. Kondratiew aka: Kondratieff and Schumpeter. A couple of really heavy duty dudes that produced tremendous results in later years, and most people are unsure of who these two were. Joseph Schumpeter gave us creative destruction and the beginning of capitalism. Sort of like he defined America. Kondratieff gave us cycles, big 50-60 year cycles, smaller cycles, business cycles versus economy cycles. The Soviets did not like his words and locked him away. And not many people know who they were. Well no one knew who Genghis Khan was or what a Mongol was until .....
Booms and Bursts:
Tulip mania about 1630. Someone sold a tulip, that was sold again for a profit, and again and again. Next thing you know the damn tulips are being planted and raised and sold by everyone. A country ended up as the tulip country. Had to grown them in green houses, they would not grow outside. Then something hit the fan, someone said we don't need all these tulips, they are not worth what they are selling for and they sell for much more than their cost. The bubble burst.
California Gold Rush of 1840s-1850s, town after town after town appeared in California and that part of the west. Then someone said we don't need all these towns because the gold is running out. The bubble burst.
Dot-com bubble, the crash of 1929, and then (you may want to put your reading glasses on now) the American sub prime mortgage boom of the 1990s, and then, and then, the early 2000s, and again about 2006, and just keep reading into the future.....and hearing pop, pop, pop.... There are a lot of others, different products, different times, same attitude and mentality.
A tulip, a house, a boom town, a housing development boom in Florida circa 1900, 1920, 1990, 2000++. My theory is that people and companies learn nothing until after they lose money, before that they are reacting, following the herd. Like a herd of Angus moving across the pasture thinking that the rest of the herd knows what is going on, and a lot of other follower types. Look up the definition of "lemming". Depending on the book, you will find words like "unthinkingly, headlong rush, flailing", and I'll be dammed, some books throw in "Wall Street.
This part of our current cycle is heading down. Not much can be done about it (the direction) except - make it worse. Do more of what got us into this. Spend, Spend, Spend. The government is asking the citizens of America to stop saving and start spending, develop more credit. Bad, Bad, Bad.
The view from the pasture is to live within our means, and that probably means reducing your spending, your cost, your consumption. These are all good things, nothing bad about them. Your elected government will spend your descent's money, and they will also spend and destroy your descent's credit. Not "your children mind you, but your descents". A long time to suffer, and for what ? ? ? ?