Quote Originally Posted by dcarrigg View Post
The funny thing is how common it is everywhere now. I mean, anyone can think of any given 'collectable' fad that popped. In the US, big ones were Beanie Babies and Baseball Cards. For a while in the 90s, a one pound stuffed animal could sell for tens of thousands, or a baseball card with a hologram could go for thousands. Now they're basically trash. A whole set of them weighing 100 pounds might be worth $20 if it's in excellent condition. These are bubbles. It's not really demand that drove the prices. At least, not from people who get any utility out of it. It was speculators. Kids who love stuffed animals and baseball weren't driving the prices up. Adults who loved money were. There was never that much demand for the underlying thing itself--intrinsic value was never worth what the speculative value was--but people had the capital to burn and were willing to burn it in the hopes their casino-bet would pay out. And just like chips from a bankrupt casino, when the game was over, the underlying things people were bidding up were obviously nearly totally worthless. They had been owned by people who didn't care about them, produced for people who didn't want them, and sold by people who didn't care if they ever looked at one again. This isn't "the law of supply and demand," it's rampant, wildcat speculation leading to bubble formation. Prices don't reflect anything other than animal spirits. They are not set at any point that would efficiently distribute goods to maximize utility. Winner-take-all markets are not efficient.
Midway through your first paragraph above, I started thinking about tulips and burst out laughing.