How to fight bubbles
It is a mechanical problem: if you put bulk cargo in a large compartment, you will have bubbles. As we have very homogenous stuff (because of commoditization) in a huge compartment (the global economy) we will have waves and, ultimately, bubbles.
The lastest episodes of asset explosions are: Latin America debt (1982); US stocks (1987); Asian currencies (1997); Internet bubble (2000), mortgages (2007) and commodities (2009).Every time a bubble bursts, people lose jobs and wealth is destroyed.
I you don’t accept the existence of this turbulence as ‘necessary’ you have only two solutions:
1. End globalization, divide the compartment, as vessels do. This a a two-prong fork:
a) Give incentives only to commerce with close neighbours.
b) Discourage the free flow of money.
The lastest episodes of asset explosions are: Latin America debt (1982); US stocks (1987); Asian currencies (1997); Internet bubble (2000), mortgages (2007) and commodities (2009).Every time a bubble bursts, people lose jobs and wealth is destroyed.
I you don’t accept the existence of this turbulence as ‘necessary’ you have only two solutions:
1. End globalization, divide the compartment, as vessels do. This a a two-prong fork:
a) Give incentives only to commerce with close neighbours.
b) Discourage the free flow of money.
2. End homogenization, commoditization; avoid too big companies;
Note, however, that this will make the economy less efficient and people less wealthy.
May be this is the fair price to pay to live in a more stable environment. I don’t know. Yet