Asset Bubbles and the Body’s Inflammation: Two Faces of the Same Signal

An essay by the writer Ben Carlson, “Why Bubbles Are Good For Innovation,” offers a counterintuitive way of looking at financial bubbles. Through historical cases, he argues that a bubble inflicts real pain on individuals but can bring unexpected benefit to society as a whole. As someone who works across both modern pathology and Korean Traditional Medicine (KTM), the traditional healing system of Korea also known as Hanbang (한방), I find the same logic sitting at the heart of one of the body’s most misunderstood events: inflammation.

What Bubbles Leave Behind

Carlson’s case is built on history. The dot-com bubble of the 1990s sent the share prices of countless IT companies soaring irrationally, and its collapse produced enormous losses. Yet the vast sums investors had poured in went to building innovative infrastructure: telecom companies laid more than eighty million miles of fiber-optic cable in the United States alone. That overinvestment drove the cost of internet bandwidth down by some ninety percent after the crash — and laid the ground on which YouTube, Google, and Facebook could later be built. Britain’s railway mania of the 1800s ran the same course. Many investors were ruined, but the railway network built in that speculative frenzy makes up roughly ninety percent of the total length of the country’s rail system today, and it transformed the movement of goods and people across Britain.

A Bubble Is Evidence of Powerful Demand

These cases put a question to our received wisdom about bubbles. When a bubble forms in an asset, it signals a powerful demand and social longing sitting behind that asset. When a society urgently wants to solve a particular problem or reach for something new, money and talent pour into the relevant field, and a bubble takes shape. The pain of the collapse, and the people harmed by it, are unavoidable. But seen at the macro scale, the process concentrates a society’s capital and energy in one place in order to solve a specific problem. The same lens fits problems around us now: adequate housing supply, paradoxically, may require enough of a price bubble to give builders the incentive to take on the capital and risk of building; and as confidence in fiat currency wavers, the search for “sound money” shows up as a bubble in alternative assets like gold or bitcoin, which in turn drives a social search for new financial systems.

The Economy’s Bubble, the Body’s Inflammation

The same idea can be seen in the body — precisely in the inflammatory response. When bacteria invade or a wound opens, the area swells, hurts, and grows hot; the same happens when we eat far more than we need. That is inflammation. It is in itself a painful, uncomfortable thing, and it can interfere with normal activity. But inflammation is the most powerful signal the body sends to solve a problem. Through it, the body halts its other activities and concentrates all its energy and resources — white blood cells and more — on the troubled site, devoting itself to repair. Inflammation, in other words, is a phenomenon of concentrated resources. An economic bubble is the same: when a problem arises in society, capital and talent rush toward it — a kind of social inflammatory response. Painful, but perhaps a necessary part of solving the problem.

Why the Signal Deserves Respect

We often try to suppress inflammation outright, simply because it hurts and unsettles us. But if we only muffle the symptom with anti-inflammatory drugs without resolving the underlying cause, we may feel better for now while the disease grows deeper — obstructing the body’s own effort to heal itself. Bubbles are no different: if we ignore the powerful signal of demand a society is sending and fixate only on artificially suppressing the bubble, the fundamental problem goes unsolved, submerges, and can return as something larger. None of this means excess is harmless. Just as too much inflammation damages tissue, a bubble also needs appropriate management. But the posture that matters is to understand and respect why the inflammation — or the bubble — arose and what role it plays, rather than treating it as an object of unconditional fear. A bubble is worth trying to read not as a thing to dread, but as a powerful signal that a society is sending as it strains toward its next stage.

In Summary

A financial bubble and the body’s inflammation are two faces of one signal: a surge of concentrated resources rushing toward a problem that needs solving. Both are painful, and both can do harm in excess, so both need management. But to stamp either out while ignoring the demand or the injury beneath it is to drive the real problem underground, where it returns larger. The wiser move — in a body or in an economy — is to ask what the signal is for, and to work with it rather than merely against it.

Related reading: Stress and Immunity in Eight Constitution Medicine

This article reflects the clinical observations and teaching practice of Professor Seungho Baek, Professor of Korean Medicine at Dongguk University College of Korean Medicine, specializing in Pathology and Oncology.