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May 28, 2007

Investment Bubbles Build America

In case you missed it, CNN Money had a great article on how investment bubbles have built America by Daniel Gross, the author of Pop! Why bubbles are great for the economy.  His arguments make a great deal of sense when you analyze American history.  From the telegraph in the 1840s-50s to stocks and credit in the 1920s to internet and telecom in the 1990s, where would America be without a bunch of evangelists at each turn of the way promoting the next big investment craze?

Applying this, what new bubbles could help build the infrastructure America needs to promote its further economic growth?  A few cool ones would be quantum computing, nanotech, sustainability, and space.  With massive investment bubbles in any of these, America could reap huge rewards and benefits after the smoke cleared.  A quantum computing rush could yield us computers the size of cell phone with the computing power of the Googleplex.  A nanotech rush could give us a fabulous array of new materials from which we could build more environmentally friendly products that are more efficient, less material intensive. and recyclable.  A bubble in sustainability could give us an infrastructure for distribution of clean fuels and excess capacity of clean energy creation and energy-efficient buildings.  A space bubble would give us the infrastructure to travel beyond Earth for cheap.  Excited yet?! :-)

Won't a lot of people in the mean time lose a lot of money?  Sure!  And that's the beauty of it.  With the risks American investors are willing to take, America booms and busts and booms all over again.  People strike it big and others lose out, but in the end our country grows by leaps and bounds and the rising tide lifts all boats.


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