Question

What do you think is happening in the world economy today?

what conditions can an economic bubble arise?

Answer 1

Today, the world is facing severe economic downturns. The increasing protectionism and trade policies has resulted in the fear of going back to the stage of closed economies. US president Donald Trump decision of putting heavy taxes on imports of steel and iron resulted in worries for countries like China, India, Europe, south east nations, etc. which are at the high stage of economic integration. Assets prices are increasing and is forming a bubble which is major concern for both developed and developing economies. Rice control is a major issue we are facing today. This asset bubble is being created because of the policies which gave easy access to money at low interest rates and all this has resulted in growing inflation. This bubble has to be stopped at some point. Economic bubble usually seen when assets prices appeared to be exceeding the intrinsic value. Today, the danger of economic bubble will not because of earlier reasons like of US bubble because of excess monetary expansion off gold standard rather today the bubble is because of the increasing dependence and sudden cutting down of economic and trade relations with a view to protect indigenous industry from external competition