Productive Bubbles - William H. Janeway
Speculative Bubbles emerge wherever markets exist for trade-able assets. Bubbles can be differentiated along two dimensions: the object of speculation and the locus of speculation. Occasionally the object of speculation has been transformational technology: railways, electrification, the internet, but oftentimes it offers no potential for increasing the productive potential of the economy. Along the second dimension, when bubbles have infected the highly leveraged banking system, the economic consequences of their bursting have been disastrous. Over the past 250 years of economic growth driven by technological innovation, “productive bubbles” have mobilized capital to deploy transformational technologies and to explore the new economic space.