The Economy of Illusion
The Economy of Illusion An Analysis of the Causes and Effects of the Dot-com Bubble (1995-2001) Introduction: In the second half of the 1990s, the world witnessed the birth of a revolutionary technology that would change the face of the planet: the World Wide Web. This emergence led to a wave of unprecedented optimism, creating the perfect environment for one of the largest speculative bubbles in modern history, the "Dot-com Bubble," where investors were no longer buying current assets, but were buying a promise of the future. The Emergence of the "New Economy" Paradigm: The intellectual engine of the bubble was the idea of a "New Economy." Proponents of this idea argued that the internet had nullified traditional valuation rules. Profits and revenues were no longer the most important metrics; instead, new metrics like "eyeballs" (user traffic), "network effects," and "market share" took precedence. This logic was used to ju...