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Throughout the history of capitalism, economic bubbles have been necessary, especially when the object of speculation is one of those fundamental technological innovations — railroads, electrification, the Internet — that eventually transforms the economy. That is good news for the economy, since the next bout of overheated investment, this time in green tech, is already in the offing.
In this engaging book, Janeway, a venture capitalist who trained as an economist, combines his academic erudition with lessons learned during 40 years of working in the financial sector. His novel argument is that financial bubbles can be expected to occur from time to time in modern economies and that on balance they contribute to positive economic transformations by financing new technologies, even though many of them inevitably prove to be false starts or dead ends.