$ burning a hole in your pocket - speculate!

As long as there have been markets, there have been speculators. Especially when driven by borrowed money, greed builds on itself until a bubble forms and pops. Reading about the history of speculative bubbles is fun and also scary.

Manias, Panics, and Crashes (Seventh Edition): A History of Financial Crises
by Robert Z. Aliber, Charles P. Kindleberger, et al.


This Time Is Different: Eight Centuries of Financial Folly
by Reinhart and Rogoff

Cryptocurrencies have screamed “speculation!” from the start. Non-productive, volatile and useless as a routine means of exchange, cryptocurrencies exploded when speculators had helicopter money from the government burning a hole in their pocket. Another example is “non-fungible tokens” or NFTs, which are purely speculative.


**Bitcoin Price Has Lost Half Its Value — Again**
**The cryptocurrency retreated to near $33,000, with evidence pointing to a stepback among smaller traders**
**by Anna Hirtenstein, The Wall Street Journal, Jan. 24, 2022**

**The drop shouldn’t come as too much of a surprise to crypto enthusiasts. It is the eighth time since Bitcoin launched in 2009 that it has fallen by more than 50%, and the third time since 2018...“It’s quite dramatic this morning and completely driven by the macro environment, buffeted about by the Fed.”...**

**Some cryptocurrencies have fallen even further than bitcoin. Ether, the second-most popular digital currency, is down 53% from the last record it notched, also in November. Solana, a cryptocurrency that gained popularity last year, has fallen 64% and Shiba Inu, another digital currency based on a meme, declined 75%....** [end quote]

As opposed to cryptocurrency, stocks represent shares in companies that produce goods and services. But speculators have driven the prices of many far beyond a reasonable value. Only “free money” keeps this going – and the Fed is about to taper their “emergency” monetary stimulus.


The bubble is beginning to deflate. The question is – how fast and how far?