Re:Historian finds tech bubble that didn't pop (180 years ago)
by btilly on Monday March 22, 2010 @01:59PM
(#1210917)
Not so fast. When the equity bubble collapsed we were near deflation, which the Fed headed off with a generous credit policy that helped fuel the credit bubble.
If we had gone into deflation then, that would have been bad. (Not as bad as the cure may yet prove to be, but still bad and not well contained.)
Typically, credit bubbles are terrible for economies because they usually start in one area and spread, infecting the entire economy.
Equity bubbles on the other hand are usually well contained. When the dot com bubble popped, we didnt have banks collapsing and affecting other businesses.