An economic bubble is a trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future. Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, once a sudden drop in prices has occurred. Such a drop is known as a crash or a bubble burst.
The American government is fast approaching the $22 Trillion mark in national debt. That’s about 137% of the entire GDP, one of the highest rates of indebtedness in the entire world. The Federal Reserve Bank of New York’s Center for Microeconomic Data recently found that household debt has risen for 16 straight quarters.
There are different categories of personal debt, like mortgages, student loans, and home equity loans. Some of these are healthy for economic growth. Credit card and home equity debt are both universally considered unhealthy because they fuel unsustainable levels of consumption in exchange for punitive interest rates. Good debt, like mortgages, usually don’t cost very much.
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