The Real Story of the Dutch Tulip Bubble?
barrons.com
barrons.com
Exercise: find the site guideline that is broken by doing so. https://news.ycombinator.com/newsguidelines.html
People who had been absent from Holland, and whose chance it was to return when this folly was at its maximum, were sometimes led into awkward dilemmas by their ignorance. There is an amusing instance of the kind related in Blainville's Travels. A wealthy merchant, who prided himself not a little on his rare tulips, received upon one occasion a very valuable consignment of merchandise from the Levant. Intelligence of its arrival was brought him by a sailor, who presented himself for that purpose at the counting-house, among bales of goods of every description. The merchant, to reward him for his news, munificently made him a present of a fine red herring for his breakfast. The sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the quay to eat his breakfast. Hardly was his back turned when the merchant missed his valuable Semper Augustus, worth three thousand florins, or about 280 pounds sterling. The whole establishment was instantly in an uproar; search was everywhere made for the precious root, but it was not to be found. Great was the merchant's distress of mind. The search was renewed, but again without success. At last some one thought of the sailor. The unhappy merchant sprang into the street at the bare suggestion. His alarmed household followed him. The sailor, simple soul! had not thought of concealment. He was found quietly sitting on a coil of ropes, masticating the last morsel of his "onion." Little did he dream that he had been eating a breakfast whose cost might have regaled a whole ship's crew for a twelvemonth; or, as the plundered merchant himself expressed it, "might have sumptuously feasted the Prince of Orange and the whole court of the Stadtholder."
https://news.ycombinator.com/item?id=16399944
And a part from Wikipedia:
https://en.wikipedia.org/wiki/Tulip_mania#Modern_views
"Research into tulip mania since then, especially by proponents of the efficient-market hypothesis,[17] suggests that his story was incomplete and inaccurate."
So there is an actual agenda ("the efficient-market hypothesis" and obviously also the political forces with anti-regulatory ideologies) behind many of the claims that the bubbles aren't anything to worry about, or that some specific even hasn't happened.
In the case of Anne Goldgar's work, claiming that she found only 37 people who paid for a bulb more than "quite good yearly wage" of that time doesn't disprove that many poorer people could have spent less and were actually bankrupt, but that their fate wasn't recorded the way it was for the highest transactions and their initiators. It should not be surprising that the 37 richest people involved (which is obvious because the poorer couldn't have even invested that much) weren't hit too hard with a single speculation.
Sure, we can spend all day speculating about records may have existed but were lost. I mean, there are no evidence of alien involvement, maybe those records were lost too?
It's also possible that the Tulip bubble was both short-lived and not very widespread and is just one of those stories that keeps getting bigger the more it gets re-told.
There are apparently still records of 37 transactions paying more than a what was then "good yearly wage" for a bulb.
Moreover, from another history book, after the "crash" "in Haarlem, the city with the biggest volume of tulip bulb trading and thus the city with the most problems" ... "the local court there refused to hear disputes relating to the tulip trade." That obviously lowered the chance of having the records about the direct effects of the crash.
How does that work? $3k is not "quite good yearly wage" in most places these days.
Purchasing power has increased along with inflation
Why would you torpedo a good article at the very end with such a stupid paragraph?
I'm not saying Goldgar sees the tulip bubble that way, or that it's a historically accurate narrative, but it's miles better than saying it was caused by "fools and greed", which is similar to saying that something was caused by evil. I guess my principal point is that stupidity, greed and evil are fundamentally socioeconomic symptoms, in that they are not explanations of themselves.
Summary message: The wealthy are discouraging the lower classes from speculating in Bitcoin, saying the lower classes don't understand it, only because they fear the undesirables will become rich like them.
The last sentence doesn't undo that.
Only this exact analogy is trotted out every time the Bitcoin exchange rate swings up or down very quickly. It's happened about a half dozen times now over the last 10 years.
You see this on the way up and down. The line comes mostly from people don't understand the underlying technology or economics.
Nor do those sage finger-waggers point out that the tulip mania was over within less than one year between 1636 and 1637.
Whatever Bitcoin is, it's not like Tulip Mania, nor is it much like anything that's come before.
Ah, only the ignorant and fools dare to criticize the magnificent world of crypto. It's an investment for the brightest and brilliant among us.
Is that what all are saying? Or is it an instruction to us all?
HN in 2019: it's Dutch Tulip Bubble! (in the midst of the next bull run)
Meanwhile, those who followed contrarian advice did great.
It feels like Slashdot calling the iPod lame.
Sometimes, it's not irrationality, but a true change.
...except everyone who did not.
"Bitcoin crash: This man lost his savings when cryptocurrencies plunged"
https://money.cnn.com/2018/09/11/investing/bitcoin-crash-vic...
Some people do great in pump-and-dump schemes, and they keep pumping even when everyone got fleeced.
Just goes to show how crazy a ride bitcoin has had in historic terms. https://www.marketwatch.com/story/why-bitcoin-is-now-the-big...
If you start counting from the first available public prices ($0.1), it's 200,000 times apreciations. If you start from the price when the first articles about it appeared on HN ($1), it appreciated 20,000 times.
Was just adding other similar references I had heard before. I'm new to HN, are there a list of flamewar topics I can look up for next time?
But at this point, I don't think it matters. Colloquially, saying 'tulips' gets the point across. People know that you are criticizing the exuberance or volatility of an ephemeral asset. People know what asset price distortion you are comparing it to.
The South Sea Company is a remarkable example of people ignoring the fundamentals of a stock in order to speculate, though. Or perhaps a story of people knowing just enough about the fundamentals to get themselves into trouble... (Many comparisons were made to the East India Company, which had a similar trade monopoly, and that comparison made some sense - until you consider the fact that a trade monopoly with land your country owns is much more profitable than one where you're frequently at war with the owners)
That people in the seventeenth century didn't really understand how to value the fundamentals of a new government trade monopoly is unsurprising and its subsequent overvaluation perhaps not that great an indictment of seventeenth century investors; a more widely applicable lesson is that price movement in this stock spilled over into newfound speculator enthusiasm for absolutely ridiculous ventures and companies pretending to be raising money for one purpose and actually spending it on something else.