What is the difference between a financial bubble and an economic bubble

What is the difference between a financial bubble and an economic bubble Introduction: The Allure and Peril of Bubbles Hello everyone! Welcome to our channel. Today, we're diving into the captivating realm of financial and economic bubbles. These bubbles, while captivating, can also be dangerous. So, what sets a financial bubble apart from an economic bubble? Let's find out! Defining the Terms: Financial Bubble A financial bubble is a situation where the prices of certain assets, such as stocks, real estate, or cryptocurrencies, become detached from their intrinsic value. This detachment is often driven by exuberant market sentiment, resulting in a rapid and unsustainable price surge. Think of it as a 'price mania' fueled by investors' optimism and the fear of missing out (FOMO). Characteristics of a Financial Bubble Financial bubbles are characterized by several key features. Firstly, there's a significant increase in asset prices, often reaching unprecedented levels. This surge is usually accompanied by a surge in trading volume as more and more investors jump on the bandwagon. Additionally, there's a general disregard for traditional valuation metrics, such as price-to-earnings ratios or rental yields.