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GBOAT: Is This the Greatest Bubble of All Time?

Charles Hugh Smith
February 17th, 2021
Of Two Minds Blog
Comments (9)

This article was originally published by Charles Hugh Smith at Of Two Minds Blog. 

The lifestyle you ordered in the euphoria will be out of stock in the panic.

Humans running Wetware 1.0 (which is all of us) love to gamble, and we are entranced by the thrill of victory and the agony of defeat. When there’s a market for speculation, these wild swings of emotion manifest as euphoria (I’m winning!) and fear (I’m losing).

Thus the soaring price of goats due to speculation in 1740 B.C. Babylon so vexed Hammurabi that he ordered the execution of those he deemed responsible for profiteering off their clever speculative manipulation.

Speaking of goats, let’s ask a GOAT (greatest of all time) question: what’s the greatest bubble of all time (GBOAT)? The easiest way to measure speculative bubbles is the starting price and the peak price, but that may not do justice to the question. Perhaps the number of people drawn into the speculative frenzy is a better measure of GBOAT: after all, if only a handful of speculators lose their shirts, how that can be the greatest bubble of all time?

To even qualify, a bubble must draw the masses into the euphoria and then slaughter them as mercilessly as Hammurabi massacred the goat profiteers.

Another qualifying factor is the scale of disconnect from reality. Even if you overpaid for a goat in a speculative mania, at least you can still milk the goat and make cheese. But tulips, which drove the remarkably excessive speculative Tulip Mania in 1636 Holland, are not even edible.

At least tulips offer a bit of beauty in a world besmirched by speculative ugliness, but the shares of the South Seas Company that sucked in the best and brightest in 1720 Britain and proceeded to lay waste to their wealth did not even have that saving grace.

Another qualifying factor is the power of the delusion driving the bubble. To qualify as a contender for GBOAT, the mania has to be utterly convincing and persuasive to everyone involved. In other words, it isn’t even speculation to invest all your money in the bubble, it’s simply common sense due to the dead certainty of the proposition fueling the mania.

The 1999-2000 Dot-Com Bubble is a good example of the universality of belief in the obviousness of the gains to be reaped: the Internet was changing the world and would expand for decades, so obviously the companies involved would grow for decades, too, as would their profits (obviously!).

The chart of the dot-com bubble offers a textbook example of how a bubble gathers momentum, spikes to insane heights, falters as the smart money exits but soars to a lower high as true believers buy the dip. Once the buying is exhausted, the bubble collapses back to its starting level.

But not all bubbles follow this trajectory. Here is a current chart of IWM, the Russell 2000 index, courtesy of NorthmanTrader.com. (I added the black box and the red line in the center panel to indicate the previous bubble top.) The violence and amplitude of this speculative mania over the past year makes the dot-com bubble appear quaintly staid in comparison.

So let’s make the case that we’re experiencing the greatest bubble of all time in real-time. The magnitude of the price movement is extreme: check. The number of people sucked into the mania is extreme: check. The power of the delusion is extreme: check. (The Fed will print trillions forever, the federal government will borrow and blow trillions forever, the world is about to enter the Roaring 20s, technology is changing the world, etc. etc. etc.) The gains to be reaped are extremely obvious: check.

History leaves no doubt that all speculative bubbles pop, and much sooner and more violently than the euphoric participants believe possible. Before Hammurabi shut down the mania in goats, a rare goat with distinctive markings could be traded for an entire house. After the bubble popped, it was just another goat.

The lifestyle you ordered in the euphoria will be out of stock in the panic. Everyone running Wetware 1.0 is prone to getting caught up in a mania in which a tulip or goat can be traded for a house. But then euphoria flips to fear and after the mania fades and the losses have crushed spirits, hopes, and dreams, a tulip is once again just a tulip and a goat is once again just a goat.

NOTE: I made up the story about the bubble in goats and Hammurabi. That is fiction, not history.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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    Author: Charles Hugh Smith
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    Date: February 17th, 2021
    Website: https://www.oftwominds.com/

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    1. Andrea.Iravani. says:

      Obviously, the MICIMATT InfraTards have decided to attack me since I dared to call them out on their evil lifestyles and blatant lies. The professors and PhDs. seem to have taken it the worst of all and their narcisstic injury is of their own making. What the fuck did they expect people to do after the legitimacy of the entire university system has been totally destroyed by a suveillance cult of pathological liars that have destroyed the world and have been wrong on every single issue, and have corrupted everything and everyone that they come in contact with? They are not worthy of teaching anyone anything! They charge obscene fees to students, parents, and the government to drill propaganda and blatant Pentagon lies into students heads! Students, parents, the government, and tax payers have to pay obscene amounts of money to this club of pseudo-intellectuals to be brain washed with lies, just in order to participate in this sick fucked up society! Now, those institutions that I have rightfully called out for fraud and demanded accountability from are expressing narcisstic rage, trying to make me look insane, by parroting me. They are frauds. Their motive is obvious. They are the scum of the earth! Professors are addicted to adoration and admiration of their students and society, but they are not worthy of any of it, because they are the pathological liars that have willingly sacrificed the entire world for the purpose of their own unearned, undeserved self-exaltations! 

      The fact that those in the surveillance state have fully committed to trying to cheat their way through life is an unconscious or subconscious self-acknowledgement that they have lost, that they have a losing strategy, and that they do not stand a chance of winning. It simoly has not risen to a conscious level in their brain yet. It will get there eventually. 

      Even retarded people would not be stupid enough to be fully committed to being wrong, evil, illegal, corrupt, and sadistic, but the surveillance state is in a league of its own when it comes to stupidity and incompetency, far more stupid than retarded people, who would know that deciding to be wrong, illegal, evil, corrupt, and sadistic would be the strategy of a loser. Apparently, they thought that they were intelligent since it is referred to as the intelligence community. Intelligent people would realize that the hubris exercised by those in the MICIMATT InfraTard surveillance cult is asinine. Now they are targeting me. Well, there are almost 8 billion people in the world, and almost all of them know how corrupt and evil the institutions and individuals that I have called out for fraud are. So, even after I die, there are still almost 8 billion ememies that they will have to try to convince to join them in order to keep their lies and crime sprees secret. It is the ideology of total insanity to believe that if they can conquere me, that their problems will be solved! They really are that mentally incompetent and short sighted to believe that. They are not cqpable of thinking five minutes ahead. Their entire lives are dedicated to looking backwards in damage control of their ast crime. The condition that the world is in proves it. Their actions and policies prove it. Their rhetoric proves it.

      Andrea Iravani

    2. Andrea.Iravani. says:

      REMEMBER WHEN PEOPLE USED TO BELIEVE THAT JAMES BOND WAS SEXY and COOL?

      Now everyone knows that spies are complete low life losers in an organized crime ring, which is definitely not sexy or cool!

      Crash the Anti-Ametican, Creepy, Surveillance State Filled With Losers! 

      Now it is an undeniably well known fact that spies are a dime a dozen, and way too many people decided that they wanted to spie on people, so many in fact that spies are now searching for space aliens and spying on viruses! Obviously, you need to get off your lazy fucking asses and work in manual labor or factories, because you are officially too God damned fucking stupid to do anything that entails any thinking at all!

      Then everyone wonders why America is not great anymore! Well, because it is full of spies that have destroyed the American way of life! Full of spies that do not produce anything at all, and are on a gigantic and expensive life support system that their victims are required to pay for! America just keeps creating new spy agencies! That is not a marketable product, or skill! Now you have resorted to terrorizing the country with 9/11 and the scamdemic! 

      You are the largest liability that this country has ever had! America cannot afford you! You are complete wastes! 

      It is my theory that the surveillance state is filled with so many atheists because they lead a double life, which is guaranteed spiritual death. There are also some in the surveillance state that are the equivalent of televangelists, that really should not be trusted. They have been spying on me too. My notice to the MICIMATT InfraTards is as follows:

      I already know everything that I need to know about you, that you cannot be trusted because you have not only violated my rights, stolen my intellectual property, and obsessively parroted me, while you are fully aware that I am a victim of torture and terrorism and just decided to exploit the situation to your advantage. 
      I do not know if this is some kind of sick, creepy, disgusting, spy game that is commonly played in the low IQ losers club of 
      MICIMATT InfraTards to try to get someone to contact them and ask them why or not, and I refuse to give any of you worthless, trashy, losers, some of whom require a Professor and or PhD title  just in order to try to convince people that they are not the unsophisticated,retarded, losers with a Jerry Springer audience lifestyle and mentality that they actually are! 

      I refuse to give you the satisfaction! You are wasting your time!
      Your lifestyles are rebellions against God! You are absolute frauds! You are predators that violate people’s rights as a way of life! You would be better off dead! You are sick, disgusting, creepy, retarded monsters! Everything is just a game and an act to you! You stand for nothing at all! Your existences are hollow, pathetic, meaningless, crimes against humanity! 

      You are guaranteed to lose! Give Up!

      Truth is etenernal!

      Andrea Iravani

      • Andrea.Iravani. says:

        I will die a happy woman, because now their mental incompetency and crimes against humanity have been fully exposed and are on display for the world to see and to know that they are masked monsters guilty of fraud, and that they are 100 times more stupid than retarded people, because even retarded people would realize that being fully committed to being evil, illegal, wrong, and pathological lying to cover up serial criminal behavior is a strategy that is guaranteed to fail! Everyone knows that except the ivy league, ivory tower, pseudo-intellectuals that have set policy for America and the world in their MICIMATT InfraTard low IQ losers club! Nobody is more anti-American than the surveillance state which is filled with losers! James Bond wannabes are a dime a dozen and there is no demand for them, and a gross over supply, which is why they have now resorted to 9/11, the scamdemic, and spying on viruses, hunting for space aliens, and polluting society with propaganda and blatant lies in the John Bolton under-world view that the truth ought to be protected by a bodyguard of lies.

        Now America has been exposed for running an economy of mentally incmpetent terrorists and spies. God damn America. America will never be great again as long as the surveillance state exists, and the surveillance state just keeps getting bigger, which guarantees that America will just keep getting worse. There is really nothing to miss about not being a part of this sick, evil, mentally incompetent, country full of frauds and losers.

        Andrea Iravani

    3. James says:

      I posted one comment this morning and was warned I am posting comments to quickly?

      • Mr_Yesterday says:

        A certain someone whom talks to hear themselves speak, is ruining it for everyone else. Moderator, requesting a comment up and down vote so we can somehow make these rants invisible, only available click to view / read more? I’ve heard of disturbing paranoid psychosis but come on…

        You know what they say; Price is not the same as value.

        Neither is word volume any more meaningful than concerted carefully crafted speech in many scenarios.

        Big shot money managers have a myopia to themselves. Without the leveraging of other peoples labor and efforts, there could be no bubble in the first place. Wealth comes from the land, from our families, from our hearts. True wealth can not be counted in hand. It is a dangerous game they play with far reaching consequences, leveraging other peoples monies and labors. Investing is not some benign action with limiting reach, even if it may seem that way to those only counting beans from the bean charts. Investing and promoting leveraging of other peoples efforts is just as potentially dangerous as managing a standing army. There is in fact, an army’s worth of labor behind those pie in the sky numbers. We continue to call foul on the notion that publicly traded companies do anyone any good when all is said and done. Brand loyalty is for the birds.

        • Anonymous says:

          The upvote/downvote was tried on here a number of years ago. Didn’t work out too well. Certain posters kept logging in to downvote everybody until most posts disappeared.

          That was the end of that…

    4. cranerigger says:

      Charles Hugh Smith, thanks for the awesome teachable moment. Many concepts & ideas fail to be conveyed to the masses. I hope many folks enjoy your analysis, and learn the important lessons therein. History can save lots of future pain, or can illustrate what we (humans) are prone to repeat. The goat story & Hammurabi tell the tale, thanks for the enjoyable read.

      • Mr_Yesterday says:

        Yeah, but what is the net effect of such activity on society at large? The stock market is like a golden calf, worshipers idolizing at it’s feet.

        Being the winner of the game does not excuse the lack of ethical principals which led to over leveraging, market manipulations, or even the mismanagement or greed which led to a public offering in the first place. People whom love their own companies and appreciate the fact they are providing gainful employment rarely offer them up for investor control. The very act of going public is the act of promoting a caste system, because inevitably the people at the bottom experience diminished human value and reduced gains from their own labors. Imagine if all the human man hours put into ‘the stock markets’ and instruments like them, were instead applied to quality of living considerations. Imagine a persons fruits of labor being their own. We could shed the out of control ultra rich, and get back to a life of liberty where all men have value and adherence to such equitable principals would be woven into society. But I digress, it’s not the past, it’s today. And today it’s more important to count your own wealth than to consider if there was fair distribution to others.

        When I hear the word goat, all I can think about is the 360 game, Goat Simulator. It’s super fun, and easy for the whole family to play. My daughter loves the rocket and gun mods. I’m partial to the funny glasses and nutty airborne activites. The only game where the goal is to glitch it out so hard, you have to reset the console. It’s the only way to win.

        • cranerigger says:

          Mr. Yesterday, I also have misgivings about our stock & commodities markets. I believe they are manipulated for the benefit of the gazillionaires. Where we might disagree relates to the same outcome (compensation) for all as in the communist ideal. Communists sell the idea but it NEVER happens. If we had real MARKET CAPITALISM, those that worked harder and developed the most important capabilities would realize the greatest benefits. I like to ask my liberal friends: “Who would you prefer to do your brain surgery? The BRIGHTEST person that worked the hardest in school & developed the best skills, or the dumbest? Your call.”

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