Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
In politics, manipulating reality can take presidence over finding reality.
I contend that financial markets never reflect the underlying reality accurately; they always distort it in some way or another and the distortions find expression in market prices. Those distortions can, occasionally, find ways to affect the fundamentals that market prices are supposed to reflect.
The reality is that financial markets are self-destabilizing; occasionally they tend toward disequilibrium, not equilibrium.
The assumption of perfect knowledge is very far from reality ... a lot of the evil in the world is actually not intentional.
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