Why do speculative bubbles eventually pop and what triggers this decline?
Replied byRay Dalio
Founder at Bridgewater Associates
Niche: Finance
Revenue: Not Publicly Disclosed/month
Location: Westport, Connecticut, United States
Started: 1975
Bubbles pop when there is an imbalance between money supply and demand, often triggered by central banks raising interest rates to curb inflation. This forces leveraged investors to sell assets to raise cash, pricking the bubble and reversing the wealth compounder.
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