While it is not true that there was no theory of bubbles in economic theory it is true that there is no theory of bubbles in mainstream US economics.

I'm well aware of that fact.

This does not justify Greenspan's ideological excesses, any more than the fact that there was no mainstream opposition to it at the time justifies the Tuskegee experiment. "But the rules of the time said I was allowed to" didn't cut it as a defence at Nürnberg, and it doesn't cut it as a defence today.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.