Understanding the Other Side of the Bubble Economy: A New Logic in the Pattern of Historical Cycles

The bubble economy never seems to be far away from the world, especially under the modern system of social governance, the improvement of efficiency has brought unprecedented productivity, the measurement of the value of assets has become a human society *** the same problem, in the end, how much is too much, or how much is too little to create? Self-justification is a very difficult thing, so under the law there will always be repeated imbalances, either downturn, or overheating, very few states are balanced and stable, the relative lack of self-examination of the economy because of the lack of trade-offs to support the problems brought about by the cycle, which is the root cause of the cycle of crisis in the Western economy.

The Asian financial turmoil, the Japanese economic bubble, the European debt crisis, the U.S. subprime crisis, behind these words are closely related to the structural imbalance of the economy, and the root of the structural imbalance of the economy lies in the failure of coordination within the economic system to irreversible monotonous, and therefore, whether the downturn or the bubble is the product of polarization.

The modern economic framework and market content is extremely complex and in-depth, the theory of the more complex economic structure by the controllable margin will be the corresponding attenuation, which causes the macro is difficult to achieve accurate regulation, and the market forces of self-regulation behavior depends on the interests of the game and logical evidence, this spontaneous force than the human control more pure but also more fragile, and often can not withstand the huge risk of dislocation test.

This brings us to the question, endogenous economic expansion brings the birth of the bubble economy, but based on the development of economic knowledge for so many years, why human and the market can not do to set up an equilibrium mechanism to realize the bubble inhibition?

There are very complex causes that need to be discussed and explained, in the current macroeconomic environment of the relative weakness of the node to look at, may be more objective and relaxed, after all, downturn and overheating is like a coin on both sides of the coin, corroboration and understanding of the one, the logic of the other will be naturally presented.

The modern theory of circular economy is based on the market relationship between production and consumption, and the creation of social experience value as the content of productivity, demonstrating the progress and development of material and spiritual, and working together to realize the continuous evolution of human society! And in the socialization of the logic of development led by the prosperity of productive forces and relations of production brings the embodiment of social surplus value, due to the existence of a huge market organization structure and hierarchical channels, the reality of the economy can not do the theoretical perfect fit, and the people as a complex participant in the main body of the formation of different economic roles because of differences in the interests of the existence of the different economic roles, which further exacerbates the birth of redundancy value between production and consumption!

The diagram above shows that based on the logic that exists between socialized surplus value and the reproduction of labor, the efficiency of distribution and the way it is done directly determines the health of the entire economic operation, which is the original drive of capital plunder in capitalism. When social capital distributes the fruits of participation in labor in a way that prioritizes development, surplus value can inherently undermine the necessity of supplying survival value to other subjects.

In today's world, apart from the self-regulation of economies in a broad sense, human society has not really had an effective third-party force to control the distribution of supply outside of the operation of the economic system.

Therefore, in terms of content development, economics is necessarily a process of continuous gaming of distributional logic under efficient supply, and there is no absolute theorization of fair distribution. So most social structures and market levels are doing their best to achieve a balanced design orientation, avoiding the tendency to tilt out of control.

This relative equilibrium seems to be becoming more and more difficult with the development of socialized mass production, on the one hand, because of the expansion of the volume of the world economy, which brings very complex variables that increase the functionality of macro-coordination; and on the other hand, because of the existence of different levels of development of the market players involved in the operation of production and consumption, which is expanding the generational differences in the value of the outputs. This is the fundamental logic of the recurrence of cycles in economics: between booms and depressions in production and consumption is the fundamental form of regulation brought about by the efficiency of economic distribution. Thus the existence of bubbles and busts not only confirms the inevitability of history, but also scrutinizes the current mode of socio-economic functioning.

So from the perspective of real economic development, is this cyclical inevitability truly instructive?

In fact, the bubble economy is not a very accurate representation, and people usually recognize the phenomenon of persistent inputs brought about by the economic heat, and if the market factors realize the efficiency of high-speed distribution and supply, then the economic prosperity is relatively high.

But behind this prosperity will bring the logic of economic differences in the level of expansion, exacerbating the contradiction between the value of assets, and ultimately the outbreak of the formation of the economy's natural inhibition of the accelerated return to rationality! Bubble that is, overheating, overheating represents the market imbalance, which includes the distortion of productivity practices and cognition of production relations. Comfort is the most difficult state to maintain in the economy, a country's economic subjects in the huge and detailed differentiation of the market logic to show a full range of comfortable development is very difficult, which requires a very clear self-positioning corrections and game practice to achieve.

The study of traditional cycle theory is based on the social stages of activity boom and bust to define the economic process, assuming that the content and form of the cycle in conjunction with the bubble to understand the significance - boom heat if the inevitable bring the stage of the bubble, and how do we understand the background reality of the environment of the value of the assets and investment activities? At what level of real and financial ****boom can sustainable value be maintained?

Modern economics for the profoundly detailed economic logic carefully combed, but forgot that people themselves are the essence of the economic behavior of the formation of the driving force, the pursuit of wealth to meet the material and spiritual behavior is the origin of all the market economy configuration, demand and supply of the market implicated in bringing about the economic relationship, and therefore, whether the cycle of prosperity or decline is essentially due to the human based on the production of the uneven distribution of means of consumption. The real sense of rhythm is also mastered in the self-awareness and equilibrium of the human economy.

The complexity of the objective environment determines the likelihood of self-correction, and the more complex and nuanced an economy is, the more likely it is to undergo difficult cyclical adjustments, as in the case of Japan and Germany. They have long been historically confused by the process of correcting the entire economic system and content, and ultimately it seems that the results have gone to extremes.

As the loss of macroeconomic self-correction amplifies downturns or bubbles, which are the source of cyclical shocks, this is still essentially a developmental driver if ultimately the shocks are still pushing human civilization forward to progress steadily, as they have in the past. If not, will the conclusion of the cyclical cycle be completely broken?

The present is a very unique era, in which we are in an environment that has changed considerably beyond what is known from past experience. Looking at such an era, based solely on the existing theoretical foundations may not be objective, because the logic of the highest macro in the essential sense seems to have begun to appear unprecedented profound transformation, and this transformation has a subversive nature, that is, the entire world economy expansion fundamentally shaken - the peak of the human population inhibition has been advanced! The demand side of the equation has been shaken to its core!

Demand comes from population, either in terms of volume or quality! If expansion becomes stock, that also means that the content of our entire world economy needs to be mined from volume to quality! An unprecedented phenomenon has emerged in the process of stock to quality: slumps and bubbles seem to exist simultaneously in the present.

The macroscopic metamorphosis of the slump and the micro inertial aggressiveness intertwined in the same spatial rhythm, the environmental inhibition of aggregate demand began to continuously elaborate, the world economic controversy began to increase, which is the change of the underlying structure. In another context, the traditional stock of inertia of the expansion of thinking is still dominated by the majority of market content participation, which is the past experience brought about by the persistence of difficult to momentarily reverse brought about. The two forces are now in a violent game, the resulting turbulence and impact is the trend for quite some time to come **** knowledge!

This alternative, unprecedented expression of the economic environment seems to indicate a new world economic pattern of change, who first penetrate and adapt to this trend, who is most likely to find in the adjustment of self-positioning opportunities! This requires economies to have absolutely strong economic enlightenment and the ability to reform to simultaneously break through the downturn support and bubble inhibition between the trade-offs between the transition, and ultimately the formation of the economy's transformation cycle!

But how easy is that? In the past, we in the downturn and the bubble when all the cognitive experience comes from a strong counter-cyclical means, downturn stimulus or bubble when the inhibition, through the financial or physical adjustment to realize the reverse support, but now it seems more need to be dialectical precision rather than a single force!

At present, the excessive application of low or negative interest rates has become a representative microcosm of the current economic downturn, this traditional extreme financial logic does seem to be a counter-cyclical means of operation, but essentially it is an extremely aggressive economic response, so the large-scale expansion to use, it is more likely to trigger the asset side of the over-inflated rather than substantial industrial relief. In this way, the bubble and downturn *** exist in the environment will continue to distort and fission, and ultimately difficult to self-control!

The bubble economy is so let people avoid is justified, the former things do not forget after the master, before the decline of the Japanese economy corroborated, after the U.S. subprime crisis brought about by the collapse of assets, it seems that behind the bubble economy is indeed carrying a country can not bear the negative, but the fact is really so?

Let's take a look at how the bubbles in Japan and the US went to extremes, so that we can better understand what the nature of the bubble really is!

How much was the Japanese economy hurt by that bubble? It's a topic that can't be avoided... was it indeed the thirty years of decline that people say it was? Although the recession is indeed a fact, but it seems that the Japanese stumble but in the course of these thirty years has always been stable in the world's third volume, while the relative quality of the Japanese companies market share is still widely recognized, the back of this masks the fact that - asset bubbles are not as bad as people think, at least in destroying the industrial roots of a The fact that asset bubbles are not as bad as people think, at least not in terms of destroying the roots of a country's industry, is not decisive.

If the Japanese example is not enough proof, the United States, which single-handedly led the Plaza Accord across the ocean, can also answer. Almost once a decade, the so-called financial crisis brought the American rhythm, in fact, is just the United States to try to dissolve the excessive bubble of the initiative: or woolgathering, or transfer the crisis to use the war machine, are based on the self-regulation of a means only. Just past the subprime mortgage from the principle is really an excessive greed type of asset expansion process, but in this expansion of the harvesting process instead of the United States to avoid a larger and more macro risks, after all, capital society has always been a cold-blooded harvesting of the bottom of the machine, the elite is where the core interests.

Based on the above two national economic evolution, it is not difficult to see that under the fear of the bubble economy, the return to the source of the bubble is actually not a primitive negative state, but only based on what perspective to understand the problem.

In the face of the current macro downturn and asset bubbles may exist at the same time a special pattern of turbulence, how do we understand the relationship between the bubble and the downturn based on the development of the real factors, which seems to be a big deviation from the previous logic, the study of economics should also focus on the development of the times, return to the real exploration of the situation.

If asset bubbles in the future are no longer as negative as they were before, but instead become another special kind of "positive" adjustment against economic collapse in the era of prolonged downturns, then all the past logics of both macro and micro may appear in a new context of understanding.

The content of the world economy is facing a new process of renewal, in which the entire chain of human society must participate, a profound historical process of unprecedented quantitative and qualitative change, no longer a technological and productive change dominated by a single industry, because this time it is a revolution in the fundamental economic demands based on the demographic peak change.

Now that the process of asset value inflation seems to have been confirmed in the trend towards firmly negative interest rates in various countries, will the ongoing macro downturn become a long-term inhibition of the top logic of individual economies?

If so, then the bubble positive call economic means to promote asset prices to return to a reasonable scale is indeed necessary, this positive is essentially a means of man-made response to risk, just do not know this monetary leverage water can play a big role, but do something better than not to do.

If not, it is not certain that such a massive and widespread runaway of monetary leverage will bring about a catastrophe that people will find hard to define, and the call for failing efficiency is far worse than a slow economic downturn, as it seems that most of the countries in our world have already almost run out of macro-regulation tools, and when the extremes come, are we going to go through the traditional cycle of a collapsing bubble once again?

Everything is still unknown, will the bubble economy rewrite the definition? Or will we be hit by another bubble crash? This all needs to be examined in the context of practice and feedback. But at this point in time, we can only hope that as the end is in the interests of all mankind to move forward, rather than the heaviness of history can not bear!