I’ve seen claims that the tulip mania that occurred in Holland in the 1630s was rational. I’ve seen the same claim for the housing bubble in the US in the early- to mid-200s. I’ve also often seen the assertion– totally revisionist and ridiculous – that “no one could have known!”

I guess you can define “rational” any way that you want, but bubbles are rational only if you believe that asset prices can rise to infinity.

Doesn’t sound all that rational to me – and notice that I did not buy a house during the bubble though I certainly could have afforded one where I lived at the time. This is because I was aware of it.  So were many others.

Just as I was aware of the stock market bubble in late ‘90s and early 2000s. A story about that at another time, perhaps.

Not a great act of genius in either case, though. Some things are just obvious.

So many people are bankrupted and impoverished by bubbles that they’d like to believe that the actions that occurred during the boom – including their own individual actions – were rational.

Perhaps on an individual level there is a marginally-applicable case for a small part of this due to inequalities of knowledge.

However, the powers-that-be like to impute rationality for their marks so they can avoid helping their victims, while at the same time claiming irrationality in their own affairs to avoid criminal prosecutions and to prevent the government from taking away their toys (that is, the ability to blow up the economy at will).

Are there any financial or asset bubbles right now? I only know the US all that well, but there is one, but it’s not that large as bubbles go.

Tech is again in a bubble, but only a relatively-small part funded by VC. When it blows up – which it will – it won’t have much effect on the economy.