Jeff Guo

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.

Well, it's adult humans, actually, who enjoy labubus.

Okay, let me make clear.

Economists do not care if people spend money on frivolous stuff that seems silly.

As long as those people value that thing a lot, right?

Then it's not misvalued.

It's not a bubble.

The problem is when people are buying LaBooBoos, not because they love LaBooBoos, but because they think these LaBooBoos are going to be worth more later on.