Despite Alan Greenspan’s claim in a speech back in 2000 that “It is very hard to definitively identify a bubble until after the fact", contemporaneously economists affiliated to the Austrian School were doing just that: identifying the bubble that Greenspan and others had help create. Remember, this was at a time when nearly everyone was borrowing like headless bulls in china shop. In an incisive report on the increasingly popular mises.org, Mark Thornton brings to light the then largely ignored analysis (at least by the mainstream media).
For example, Thornton points to the fact that Christopher Meyer in 2000 stated that:
Looking back, future financial historians will likely relate the Glassman-Hassett thesis to Irving Fisher’s famous proclamation in 1929 that "stock prices have reached a permanent and high plateau." James Grant likes to say that there are three common features of a bubble: one part fundamental (i.e., a technological revolution), one part financial (i.e., a surge in money and credit) and one part psychological (i.e., a suspension of belief in traditional valuation measures). All the ingredients would appear to exist in the current bull market.
Similarly, Tony Deden of Sage Capital Management wrote in a paper entitled “Reflections on Prosperity" in 1999 that the growth in money and credit signalled that they were in the presence of a huge bubble; going on to draw attention to the cause of the current bubble:
Their cause is not the fault of capitalism as it has been suggested, but an excessive amount of money and credit created by central banks. Yet, this seems to escape the understanding of those who will, in one day, convene congressional hearings to determine what caused this destruction. The culprit is, as it always has been, the same organization, which professes interest in bringing about price stability and low inflation: The Federal Reserve Bank and its policies of money market intervention, credit creation and loose money.
Also, Sean Corrigan saw it coming, writing in 1999:
Monetary pumping on this order, as the Austrians will tell you, leads to serious distortions in the price structure of an economy which cannot be captured in crude, aggregate, index numbers. These distortions between the value of goods, present and future, lead to mal-investments and a clustering of false decisions. Factories built and productive processes put in train based on a market rate of interest artificially lowered by the effulgence of fiduciary media are not backed up by real savings and thus become misaligned with a propensity for consumption which has, if anything, intensified.
There are many others who saw that the economy had no clothes on; there are many who continue to do so. After all, governments are still pumping credit into the economy in the same way that the emperor continued his parade long after it was firmly established that he was naked.