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The Economist disagrees with you: https://www.economist.com/blogs/freeexchange/2013/10/economic-history https://www.economist.com/blogs/freeexchange/2013/10/ec

The Economist disagrees with you: https://www.economist.com/blogs/freeexchange/2013/10/economic-history https://www.economist.com/blogs/freeexchange/2013/10/economi... Was tulipmania irrational? Tulipmania was not just crazy speculation

ajross 9y ago
The point was that it wasn't caused by government regulation. And it was a quip, anyway, pointing out that even late renaissance "investors" in a completely new market would see a boom/bust cycle.
- sol_remmy 9y ago
  Please read the article, it explicitly states that the Dutch tulip boom/bust was caused by government regulation. > Earl Thompson, formerly of UCLA, takes a different approach. He reckons that the market for tulips was an efficient response to changing financial regulation—in particular, the anticipated government conversion of futures contracts into options contracts. This ruse was dreamt up by government officials, who themselves were keen to make a quick buck from the tulip trade. > In plain English, investors who had bought the right to buy tulips in the future were no longer obliged to buy them. If the market price was not high enough for investors’ liking, they could pay a small fine and cancel the contract. The balance between risk and reward in the tulip market was skewed massively in investors’ favour. The inevitable result was a huge increase in tulip options prices. (The price of options collapsed when the government saw sense and cancelled the contracts.)
  - anon1385 9y ago
    Of course The Economist thinks markets are perfect and government regulation is to blame for everything. Spreading that idea is why the magazine exists. If the article was promoting a different theory then it would never have been published in The Economist.
dmoy 9y ago
I'm not following, nowhere in that article does it say there was no boom/bust of tulips.
- sol_remmy 9y ago
  The article states 1) it was a boom/bust and 2) the boom/bust was caused by government regulation. It states that Tulipmania was a rational response to anticipated government regulation that would let investors cancel their futures contracts for only a small fee.
tweedledee 9y ago
Only an economist could look at the tulip 'incident' and not see a speculative bubble

ajross 9y ago

The point was that it wasn't caused by government regulation. And it was a quip, anyway, pointing out that even late renaissance "investors" in a completely new market would see a boom/bust cycle.

sol_remmy 9y ago
Please read the article, it explicitly states that the Dutch tulip boom/bust was caused by government regulation. > Earl Thompson, formerly of UCLA, takes a different approach. He reckons that the market for tulips was an efficient response to changing financial regulation—in particular, the anticipated government conversion of futures contracts into options contracts. This ruse was dreamt up by government officials, who themselves were keen to make a quick buck from the tulip trade. > In plain English, investors who had bought the right to buy tulips in the future were no longer obliged to buy them. If the market price was not high enough for investors’ liking, they could pay a small fine and cancel the contract. The balance between risk and reward in the tulip market was skewed massively in investors’ favour. The inevitable result was a huge increase in tulip options prices. (The price of options collapsed when the government saw sense and cancelled the contracts.)
- anon1385 9y ago
  Of course The Economist thinks markets are perfect and government regulation is to blame for everything. Spreading that idea is why the magazine exists. If the article was promoting a different theory then it would never have been published in The Economist.

dmoy 9y ago

I'm not following, nowhere in that article does it say there was no boom/bust of tulips.

sol_remmy 9y ago
The article states 1) it was a boom/bust and 2) the boom/bust was caused by government regulation. It states that Tulipmania was a rational response to anticipated government regulation that would let investors cancel their futures contracts for only a small fee.

tweedledee 9y ago

Only an economist could look at the tulip 'incident' and not see a speculative bubble