What is the difference between a bubble and a recession?

What is the difference between a bubble and a recession Introduction: The Ebb and Flow of Economies Hello, and welcome to our video on the intriguing world of economic cycles. Today, we'll be focusing on two significant events that shape these cycles: bubbles and recessions. While both have the potential to disrupt the financial equilibrium, they differ in their origins, characteristics, and aftermath. So, let's dive in! Unraveling the Bubble Phenomenon A bubble, in economic terms, refers to a situation where the price of an asset, be it real estate, stocks, or even cryptocurrencies, becomes detached from its intrinsic value. This detachment is often fueled by speculative buying, driven by the expectation of further price increases. As more investors jump on the bandwagon, the demand surges, causing prices to skyrocket. However, this upward trajectory is unsustainable, as it lacks a solid foundation. Eventually, the bubble bursts, leading to a sharp decline in prices, often resulting in significant financial losses for those involved. The Anatomy of a Bubble Bubbles are characterized by several key features. Firstly, there's the 'herd mentality,' where investors, driven by the fear of missing out, flock to the asset, further driving up its price.