In the late 1990’s, many prominent figures in business, technology and economics started worrying about the so called year 2000 problem, also known as the Millennium bug or Y2K. This problem refers to how computers back then stored calendar dates with only two digits, making the year 2000 indistinguishable from 1900. Therefore, many people were anticipating critical issues at the turning of the millennium, as this would render all sorts of dated records and real-time events wildly incorrect. It was speculated that this would trip up anything from stock markets to manufacturing processes to your alarm clock. After all, if the computers think it’s 1900, surely that would have some side effects... Right?

Meanwhile, Alan Greenspan, then head of the Federal reserve, the central bank of the US, took a particularly keen interest in this issue. In fact, he was particularly worried about it — or at least, the possible societal side effects stemming from the bug. Greenspan said that if Americans were worried about frozen bank accounts and disabled ATM machines, that would lead them to withdraw large sums of cash in advance, all of which would of course place stress on the system. While he was urging citizens to remain calm and not to prepare, he had the Federal Reserve banks prepare by literally stockpiling shrink-wrapped currency at nine locations across the country. All of this harkens back to today, and the scrambling for facial masks.

Greenspan also promised more liquidity if needed, and he kept interest rates relatively low. All of this helped perpetuate easy credit to flow into the most speculative assets of the time — Dotcom stocks. So yes, in some small part, we do have one man’s overblown worries to thank for the creation the Dotcom stock market bubble. When it became clear that the dotcoms were not really going to change everything we knew about the world (at least not yet), and that many of the Dotcom startups were just pipe dreams, frauds and unnecessary technology for technology’s sake, the Dotcom bubble of course popped. 

Of course, Greenspan’s reaction was to lower interest rates even more to try and facilitate more credit creation, and elevate the markets once again. So, throughout the next few years, interest rates were held low to try and bolster the economy, which was now sorely needed considering the country had now launched into war with Iraq. Again, the easy money flowed to the next big thing that seemed to have legs — the asset class that up until that point had never seen a secular decline in prices: the housing market.

Fast-forward to 2005, when Ben Bernanke started raising rates, and as people could now no longer afford their mortgages at the rising interest rates, the bubble popped. Because you now had more leverage in the system, more credit and more instruments built on top of housing assets, the ensuing chaos now threatened the greater financial system, and the banks themselves. And as the market forces started coming into play to clean up the mess and liquidate the over leveraged banks, the fed’s solution was, of course, to lower interest rates again and to provide liquidity to save the banks. (The ones that got us in this mess in the first place).

This time, with yet another sugar rush created by the fed, capital started flowing into the next set of risk assets — yes, the fed had blown up the everything bubble. In 2010 and onwards, stocks, bonds, housing — everything rallied. It rallied, of course until it found its next real world obstacle. A pin that would prick the bubble. That turned out to be, not a bug, but a virus. 

Fast forward to 2020. As the market forces once again caught up with the artificial bubble, sending stocks into free fall. In fact, stock markets came crashing down at the fastest rate ever. And right on cue, as the crisis deepened, both the central bank and the greater government panicked went into hype