This period in the U.S. economy is quite similar, in my view, to the 1870s when despite massive DEFLATION, some of the biggest companies in American history were forming, and the giant U.S. industrial spurt started.
But back then they weren't forming in China, why would they form here when it's been decided that American labor costs too much and Indian programmers can do a better job being paid far less money?
That's an intriguing parallel- I think the future will be very interesting.
The past is past...over, gone.... we are NOT in any situation anywhere like the 1880's or 90's.... geeze, where did you get your degree in Economics????
Not "all", but most.
Investors went positively able-sugar over "dot coms" and threw obscene amounts of money into businesses with questionable business plans. It was if someone decided that the rules for business had simply disappeared (you know..........little things like "a company needs to actually turn a profit"). It was nuts; I was smack in the middle of it, and I kept advising my clients (I was a consultant at the time) to take heed ("......don't go stupid on me here; understand that you MUST have a business plan that "closes"; don't think you'll strike it rich by having an Internet focus only...").
It gives me zero pleasure to say that I saw it coming.......big time. When the balloon burst and tens of thousands were bounced out of work (most with huge debts), I didn't blink an eye, much as I felt for 'em.
Still...........I think the whole misnamed "dot bomb" thing was healthy. It separated the wheat from the chaff and made the world of online business grow up fast. e-commerce didn't go away; far from it. It morphed quickly into a real business model......and that sorely needed to happen.
The big improvements in the economy come when the counter-deflationary infusion takes the form of tax cuts, which give consumers money to spend and incentives to work.
That's my theory of the day. Have at it.