For the benefit of Former Federal Reserve Chairman Alan Greenspan, who professed an inability to identify a bubble before it popped, here is the clearest, most concise definition I’ve seen yet:
Currency is like any financial innovation, an obligation secured by assets. When the obligation is perceived to have increased far beyond the level justifiable by the assets, which in this case make up a country’s economy, a bubble has formed.
–Alice Schroeder, Bloomberg (Oct. 1, 2009)
There Mr. Greenspan, clear enough?