>a global evolution of government monetary policy which allowed for financial mechanisms to enable such high valuations of companies.
It had more to do with how the private sector chose to valuate internet sites. They were developed by people who had no understanding of what an internet was, or did, or how it was expected to make money. The internet had only permeated the public consciousness in 1995, and so these idiots, who probably didn't get online until 1997 or 1998, were somehow experts on how to valuate companies by 1999? Hah.
Their method? Take the number of users of the site, multiply by a thousand. That's the valuation.
It's no wonder that people like Warren Buffett steered clear of investing in tech stocks for exactly that reason - he said he'd invest once someone developed a better way of determining how much a stock was worth.
But a lot of idiot investors instead used this terrible valuation rule, did some math, determined sites that did not and could not ever make money were leaping in "value" hand over foot, and invested billions of dollars in them. And then whoever was left holding the bag when the reality of a zero return on equity finally hit home lost all the money they invested.
The government didn't hold a gun to these people's heads to make them make brain dead investments. I argued very strongly with some of my friends at the time in investing in tech bubble stocks, for exactly the reasons above, but they were firmly convinced that the number of users was a realistic evaluation of a web site's worth, and so ignored me and lost their money anyway.
