Boom and bust
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The term boom and bust refers to a great buildup in the price of a particular commodity or, alternately, the localized rise in an economy, often based upon the value of a single commodity, followed by a downturn as the commodity price falls due to a change in economic circumstances or the collapse of unrealistic expectations.
Boom and bust phenomena have existed for centuries. During a "boom" period, buyers find themselves paying increasingly higher prices until the "bust", at which time the goods and commodities for which they have paid inflated prices may end up as valueless or nearly so.
On a broader basis, the phrase boom and bust can also refer to an economy's credit cycles that occur as a result of fluctuations in "fiduciary media" or fiat money. This view is predominant in the business cycle theory of the Austrian School of economics.
[edit] Examples of "Booms and Busts"
- the Tulip mania of the 1630s, in Holland[1]
- towns such as Bodie, California that prospered during the California Gold Rush of the late 1840s and early 1850s then became ghost towns[2]
- the Roaring Twenties in the United States, followed by the Wall Street Crash of 1929 and the Great Depression[3]
- the Dot-com bubble, involving new electronic technology and the internet, in the late 1990s[4]
- the American subprime lending boom in the 1990s and early 2000s, followed by the Subprime mortgage crisis of 2006 and beyond[5]
- The Irish Celtic Tiger which led to massive economic growth in Ireland beginning in 1994 and continuing through to 2007. It was based on exports of Information Technology, Software and financial service up until 2001. The economy then veered of course due to government mismanagement and the economy grew based on Domestic housebuilding up until 2007. In 2008 Ireland's economy entered recession and in 2009 this recession has grown to a full blown economic depression.
[edit] References
- ^ J. L. Price (June, 2008). "Tulipmania: Money, Honour, and Knowledge in the Dutch Golden Age (review of book by Anne Goldgar)". Institute of Historical Research. http://www.history.ac.uk/reviews/paper/price2.html.
- ^ Michael H. Piatt. "Bodie:"The Mines Are Looking Well..."; The History of the Bodie Mining District, Mono County, California (page featuring book)". North Bay Books. http://www.bodiehistory.com/book.htm.
- ^ Roger W. Garrison (1994). "The Roaring Twenties and the Bullish Eighties:The Role of Government in Boom and Bust". Critical Review 7 (2). http://www.auburn.edu/~garriro/c5fedres.htm.
- ^ Tom Foremsky (2008-10-13). "We've been here before - boom and bust in Silicon Valley". Silicon Valley Watcher. http://www.siliconvalleywatcher.com/mt/archives/2008/10/weve_been_here.php.
- ^ Edward M Gramlich (2007). Subprime mortgages : America's latest boom and bust. Urban Institute Press. ISBN 9780877667391. http://www.worldcat.org/oclc/123818339.
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