Apr.
23
2018

’THE EVERYTHING BUBBLE’

After the ‘Dotcom bubble’ of 2000 and the 2008 ‘credit bubble’, the new name that has been spreading is the 2017 ‘Everything bubble’. It is a practical name since lately, money itself has lost its value. The price of money is interest rate, which currently is zero. As a consequence, if money ever partially regained its value, then the current price of every asset would be viewed as a bubble in retrospect.

  • We could show our grandchildren the places where panel buildings used to stand that were demolished 50 years after the ‘Everything bubble’, yet at its time, people did pay their 25-year savings for them.
  • We could tell them about the abundance of cryptocurrencies. From their point of view, it would be incomprehensible that some people actually thought that paying by a 100 different digital currencies in the future would have been a reasonable idea.
TOP 10 cryptocurrencies with the highest market capitalization
1. Bitcoin
2. Ethereum
3. Bitcoin Cash
4. Ripple
5. Dash
6. Lightcoin
7. IOTA
8. Ethereum Classic
9. Monero
10. Cardano
Source: Coinmarketcap.com
  • We could shamefully confess how we had thought that if a prime minister’s friend joined a company, then its minority shareholders would have become multibillionaires in the end.
  • We could stroll around the deserted concrete bodies, which were left behind because by the time labour force would have been found to finish them, there were no cheap credit (or investors or potential flat buyers) to be found.
Price changes in the construction sector in comparison to the middle of 2016, in terms of percentage
Personal expenditures In Budapest
unskilled worker 20%
trained worker 25%
skilled worker 35%
production manager, technical leader 37%
facility manager (project leader) 40%
Source: ÉVOSZ
  • We could show which flat we bought saying that ‘my grandchild would live here and until then I would rent it out’, not knowing how much damage the so-hard-to-find-tenants would do, and not anticipating that our grandchild would go to university abroad.
  • It will be difficult to make them understand that the 1500-point American stock exchange index in 2007 heartened us and we thought we would make enormous profits from it. Then, after a decade later, the 1800 points felt like a tragedy since we were expecting 3000 by that time.
The past 15 years of the S&P500 index (Source: Finance.yahoo.com)

The past 15 years of the S&P500 index (Source: Finance.yahoo.com)

  • And we could blame the government that it acted late and at the worst possible times. Just like the Danish government, which, only after 8 years of stock exchange rise has just begun to plan what tax advantages could incite the people to buy shares from their untapped bank deposits.

Everyone would have their own story to tell. Of course, only if money partially regains its value. But to achieve that, interest rate should be paid for it.

Original date of Hungarian publication: 23 DECEMBER 2017