The South Sea Bubble Explained
Price is what trades, value is what pays; a bubble is when price runs far ahead of what the payoffs can support.
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1.What is a bubble, in the video's wording?
Price is what trades, value is what pays; a bubble is when price runs far ahead of what the payoffs can support.
2.What was the swap offered by the South Sea Company?
In effect, national debt was turned into corporate stock (NBER paper).
3.What is the difference between price and value?
Value, in textbooks, is the present value of all future dividends (OpenStax).
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Education only. Not financial advice.