1.0Drishtikonehttps://www.patheos.com/blogs/drishtikonejessicafickhttps://www.patheos.com/blogs/drishtikone/author/jessicafick/A Story of an Asset Bubblerich600338<blockquote class="wp-embedded-content" data-secret="9lRQ70k5B1"><a href="https://www.patheos.com/blogs/drishtikone/2008/04/story-asset-bubble/">A Story of an Asset Bubble</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://www.patheos.com/blogs/drishtikone/2008/04/story-asset-bubble/embed/#?secret=9lRQ70k5B1" width="600" height="338" title="“A Story of an Asset Bubble” — Drishtikone" data-secret="9lRQ70k5B1" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script type="text/javascript">
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Atul Sarana is a Chemical Engineer of 1997 batch & now a Certified Financial Planner (CFP) practitioner for last three years. HIs company provides independent Financial Planning Services to High Net Worth Individuals, Non-Resident Indians, Institutions, Corporates, Charitable Trusts etc. His expertise is simplified & personalized financial advice that even a layman can understand. Apart from India, we have our clients in UK, US, Bahrain, Dubai etc. You can contact Atul Surana via email. Here's a very interesting anecdote that describes how an "asset bubble" builds up and what are its consequences. Read it even if it confuses you a bit...things will be clear as you reach the end.... ANECDOTE - Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollar as there were only two pieces of 1 dollar coins circulating around. 1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar. 2) B decided to purchase the land from A for 1 dollar. So, A and C now each own 1 dollar while B owned a piece of land that is worth 1 dollar. The net asset of the country = 3 dollar. 3) C thought that since there is only one piece of land in the country and land is non produceable asset, its value must definitely go up. So, he borrowed 1 dollar from A and together with his own 1 dollar, he bought the land from B for 2 dollar.