Seeing that there was room for appreciation, everyone used their savings and extra money to buy pots. What's more, they borrowed money to invest, and then the price soared to millions. Finally, there is not much spare money in the market, and fewer and fewer people buy pots. Pots are not easy to sell, and the price of pots has reached its peak. Then someone began to want to sell the pot, but it was no longer easy to sell.
More and more people found this situation, and everyone began to sell at a reduced price, but no one bought it because everyone was waiting for the lowest price. The end result is that most people who entered the market later sold the pot at a price lower than the cost, and the deposit was gone, the house was gone, and the borrowed money was gone. For society, the real economy is difficult to survive because of lack of funds, so it is more difficult to find a job, with lower wages and less money owed.
The historical origin is 1720 "south sea bubble Company Incident" in Britain. At that time, Nanhai Company monopolized the trade right with Spain under the authorization of the British government, boasting the rapid growth of its profits, which triggered an unprecedented upsurge in Nanhai stocks. Without the support of the real economy, its share price fell rapidly after a period of time, expanding and bursting like a bubble.
Other early bubbles include the "Tulip Incident" in the Netherlands and the "John Law Incident" in France.
Under the modern economic conditions, the emergence of various financial instruments and financial derivatives, as well as the liberalization and internationalization of financial markets, make the bubble economy occur more frequently, spread more widely, cause more serious harm, and deal with more complicated countermeasures. The root of bubble economy lies in the deviation between virtual economy and real economy, that is, virtual capital exceeds the virtual value generated by real capital.