The Bubble Economy Vs. The Productive Economy

A bubble can be characterized as an asset inflation which doesn’t generate wealth. Inflation in stock and house prices is a typical example. This asset inflation does not produce tangible goods.

The bubble economy enriches those who are good at rigging the system, while kicking the real creators of wealth such as engineers and innovators to the curb. Throughout the boom-bust cycle, so much wealth has been wasted.

Asset inflation coupled with reckless public spending leads to massive amounts of debts as the cases of Japan and the U.S have shown. In an environment where too much debt requires to be written off or worked off, businesses are sitting on their balance sheet without expanding.

Innovation and production are at the heart of a productive economy. I emphasized the importance of innovation in creating jobs and wealth on numerous occasions. There is contribution or demand on the labor pool in a productive economy. The productive economy contributes to the elevation of lower classes’ income by providing them with real jobs.

Who is most responsible for the bubble economy? In order to get the real productive economy back on track, this question begs to be answered.