Bubbles and the American Frontier Mentality

In our experience, people seem to intuitively know when they are partaking of some great swindle or scam. An expression of this is a bumper sticker comes we seem to remember: "Please God, just one more bubble before I die," is how it goes in our memory. Also, the investors who gave Bernard Madoff all their life's savings often 'knew' that he was running a scam -- they assumed that he was operating on insider trading. Unfortunately for their belief in their own cunning, Mr. Madoff was running a swindle.

These are two isolated and recent -- in the case of the sticker, rather ephemeral -- examples, but the mentality is not far removed when semantics are considers. When things are moving up in a speculative orgy, the preferred nomenclature is a 'boom,' rather than a bubble. The movement only becomes a bubble after the fact, when it has burst and wiped out entire fortunes. After the burst, when the present-tense-boom becomes a past-tense-bubble, there is one question that is often asked: where is the next boom?

The United States, at its birth, was a tiny nation facing massive amounts of land of unknown qualities to the West. It was an experience wholly unlike anything that had been seen in Europe in recorded history. No one living at the time had ever enjoyed the experience of facing the sunset and thinking about the impossibly vast territory that lay beyond the borders of the Colonies.

It didn't take long for the nascent United States to figure out that great riches lay in the easily conquerable land. The infamous push westwards began, and with it a mythos was born: no matter what one's situation might be, one could always go somewhere else -- at the time, westward -- to begin anew. Fortunes could be made and lost, but there was always the knowledge that something else lay waiting on the frontier.

The focus on the West faded in time, but the sense remained that something was always out there. There was suburbia to develop, after all. Even if, say, the dot-com companies weren't the bubble -- sorry, 'boom' -- they once were, there was always housing in California. Now that the housing (ahem) 'boom' is over, the hoped-for next 'boom' is in green energy. And after that is revealed to be a bubble, it is assumed there will be another boom... and so on, and so forth.

Such a reliance on riding the bubble cycle is both illusory, and destructive. The illusion is that there 'will always be another boom;' the destruction is that such waves of exaggerated boom-and-bust is horrendously wasteful of natural resources. If Peak Just-About-Everything is past, or even nigh, the resources will no longer be abundantly available to perpetuate this frontier mentality. Attempting to continue this fetish with bubbles in the future will become more and more destructive of dwindling resources of all sorts. The peak of each bubble will never quite get as high, and the trough will be ever more miserable.