I have just read an article repeating the claim that bubbles are a part of the human condition. They are not.
They have a very specific and easily avoidable cause.
Bubbles are created by the lack of Gold in circulation. Lacking Gold, there is no access to a store of stable value. Without that, people look for other ways to maintain the value of their wealth. Essentially, it brings about a return to the days of trading goods.
A trading good achieved that status by holding a relatively stable value over time – compared to other goods. That made them highly desirable to those wishing to hang on to the value of their surplus production. Cattle, salted fish and salt etc. all acted as trading goods.
When Gold (money) appeared on the scene (circa 1500BC), the dynamics of the marketplace were revolutionised. The world entered its first golden age.
For the last 3,500 years, whenever money has been withdrawn from the marketplace, people have been forced to look for wealth preservation elsewhere.
When Gold is in circulation, its properties are well understood. Today, it is not and they are not.
Today we have major bubbles in stocks, bonds and real estate. They are just modern day trading goods. All of these monetary substitutes will end up with the stability of value of cattle with foot and mouth disease.
There has never been a bubble when unadulterated Gold coins were in circulation. Bubbles are not a part of the human condition, they are a part of the government monopoly of money condition.
Article first published here