Health

When the superbubble bursts

Protocol By Owen Thomasandthe Source Code team,
Tags
stock market
market bubble
Global Economic Collapse
federal reserve

Are we in a bubble? Are we in a superbubble? And what happens when it bursts?

Bubble goo, probably. Or at least that’s how we thought about bubbles in the dotcom era: They end in a big, sticky mess that takes forever to clean up. But things have gotten a lot more complicated since then. A singular bubble that pops all at once isn’t the right mental model anymore.

Cash inflates bubbles. And the global pool of money just keeps swelling.

  • By 2020, gross savings in the U.S. and China combined had grown to more than $10 trillion, according to World Bank data. The pandemic only spiked the savings rate higher as households cautiously guarded cash. And those are just savings, not investments; the global stock and bond markets were worth nearly $230 trillion that year, according to SIFMA.
  • Some of those savings flooded into Big Tech: Even with recent market pullbacks, Apple and Microsoft are worth more than $2 trillion, and Alphabet and Amazon are also in the $1 trillion-plus club.
  • Then there’s crypto; The five most valuable coins are collectively worth roughly $1.1x trillion according to CoinMarketCap, and that’s after the #BitcoinCrash over the last few days that saw bitcoin, ether and other cryptocurrencies drop 20% or more.