With the Dow Jones average at a remarkable 25,800, it might be worth thinking about what might cause the next economic collapse the way that mortgages set off the last one. This is not to say that one is necessarily imminent, just that there tend to be cycles so it’s worth thinking about the next one.
One possibility is a 1929 style stock market crash. Stocks haven’t reached “Dow 36,000″ yet, but they are high.
Another is crypto-currency. Bitcoin is obviously a brilliant innovation, but even the smartest new innovations in currency often cause problems initially. For example, J ohn Law was a genius Scottish economist who got himself in tight with the French monarchy in the early 1700s to promote his paper money scheme backed by shares. Paper money was a pretty good idea (I have some in my wallet), but his Mississippi Bubble of 1720 caused no end of problems.
China is a possibility. It has been growing forever, so a retrenchment will eventually happen.
Enron style corporate scandals are a possibility, especially since Trump is lightening finacial regulations.
Mortgages might come back into speculation. The mortgage industry remains cautious, but we’ve never honestly discussed in public exactly what went wrong last time (such as, too much lending to Hispanics), and what people don’t know can hurt them.
What do you predict?