Jeff Guo

Some argued that if we can spot a bubble, which is a big if, but if we can, shouldn't we go in and fix it?

But the clean side of the debate was like, we are horrible at predicting bubbles.

And there's a good chance that if we step in, we'll just do more harm than good.

So let's just wait it out and we'll clean it up afterward.

Right.

Number one, bubbles hurt the economy, of course, when they pop.

But not all bubbles cause the same amount of economic damage when they pop.

It depends on how that bubble is connected to the rest of the economy.

Like, who is investing in this bubble?

How many people are employed in the bubbly industry?

Gotti says another major risk factor is, are people borrowing a lot of money to fuel the bubble?

So that's number one.

But even before bubbles pop, there is another more subtle way that they can hurt the economy.

When there's a bubble, that means a lot of companies are spending money on the wrong thing.

Like, bubbles can lead to a lot of wasted investment.

Yes, Nick, labubus.

You know, those scary little dolls that people are going crazy over right now?

I would argue that there is a bubble forming in labubus.

You see these collectors, right?

They are paying thousands of dollars for these rare labubus.