Relationships between speculative bubbles and economic depressions?

It seems to me that after each bubble (like the American stock market speculations of the 1920’s or the 1990’s dotcom bubble) , an economic depression ensues.

Possible explanation?

When a bubble happens, several people lose their sound judgment and spend their capital and precious time on nonprofitable business dealings. They waste their time on activities, which do not create food and other life’s needs. Without feeling so, they get into debt, one way or other. Eventually, the bubble bursts and they realize that they didn’t make a profit from the work and capital spent.

Since their capital is gone and time was spent on other than profitable work, they find themselves without money to buy the necessities and luxuries of life. Hence, depression.

Depression ends after people work few years and pay off their debts (both real and virtual) and again have money to spend.

Author: Omer Zak

I am deaf since birth. I played with big computers which eat punched cards and spew out printouts since age 12. Ever since they became available, I work and play with desktop size computers which eat keyboard keypresses and spew out display pixels. Among other things, I developed software which helped the deaf in Israel use the telephone network, by means of home computers equipped with modems. Several years later, I developed Hebrew localizations for some cellular phones, which helped the deaf in Israel utilize the cellular phone networks. I am interested in entrepreneurship, Science Fiction and making the world more accessible to people with disabilities.