The United States has economic bubbles like the recent mortgage or high tech ones for three reasons.
1. The global economy is growing and producing lots of profits.
2. The United States is the safest place to invest and grow your investment.
3. Eventually, you run out of good investments no matter where you put your money.
If you're a tycoon in, say, Taiwan, and you have buckets of cash to invest, where do you go?
- You could invest in
EurabiaFrance. However, France produces agricultural products. They haven't been a growth investment since the Industrial Revolution.
- You could go to Russia and have it all stolen by the kleptocrats in Putin's administration.
- You could go to China, but when you look at their companies' financial statements, they look like they were assembled by three dogs and a goat. Who knows what's really going on there?
- You could go to South America, but every so often they seem to have a banking crisis and the numbers on their money suddenly acquire more and more zeroes at the end.
Sort of like when mortgage lenders start giving home loans to drunks on the street corner.