Dot+Com+Bubble+2

The Dot-Com Bubble (1995-2000)
The Dot Com Bubble occured as the societal role of the internet rose to prominence. Companies began to notice that their internet sectors were becoming more popular. Thus companies saw their equity value rise rapidly on the internet. Before the bubble burst, interests rates were going up because there was a positive demand shock, but this was not a demand for products; it was a demand for stocks. People were driven by greed, and believed that if any company had a website, it was worth investing in. Thus the demand for stocks grew. As time went on, people realized that these stocks were failures because they were not worth anything, sparking the eventual burst of the bubble.. To stop a recession from occurring, the government intervened and lowered the interests rates to increase the quantity of money in the economy that can be spent. While the bubble began to grow, people sought to form the next Silicon Valley by building numerous office buildings across the nation. The burst of the bubble had disastrous effects; several lost their jobs and economic turmoil took its toll on the United States.


 * During the Bubble**

The bubble was peaking from the mid 90s until it burst in 2000. During this time period, people believed that the internet stocks were worth investing in (specifically stocks with "e" or ".com" in the name), fostering a demand for stocks. The bubble burst in the end because it turned out that the stocks were worthless. This was the first time in history that companies started to heavily use the internet, and the internet was becoming a crucial part of the daily lives of Americans.


 * When the Bubble Burst**

People wanted to invest in stocks, so they put a lot of their savings and disposable income into these stocks. When
the market crashed and people deemed these internet stocks worthless, people lost a lot of money. This then caused people to demand less and brought down our GDP. Also, some people took out loans to invest in stock. When the stocks became worthless, these people could not pay back their loans.

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After the bubble, interest rates went down, plunging the US into a recession. This is evidenced by the devastating effects that the crisis had on the stockmarket, such as the fact that NASDAQ's stock value lowered 78%. Other effects on stock prices can be viewed here. To counter this, the US implemented =====

to the bubble. The government dealt with the crisis by implementing lower interest rates. Economically speaking, however, the
experience of the crisis did not seem to teach Americans much.