Messages for governments, central banks and investors
Boom and bust are inherent features of capitalism. The tendency to episodes of over-confidence, even mania, is present in many people, maybe especially the most creative. The message of history is that occasionally, perhaps under modern conditions more frequently, there is a tendency to episodes of collective optimism or even mania. This can create politicians who embark on great projects, or go to war, or attempt both tasks at the same time. Companies similarly can pursue impossible dreams, and occasionally ordinary people as investors back such companies in what becomes an asset bubble. Sometimes the dream is realised, creating great wealth.