There's an infinite number of economic bubbles... and one book that taught me that

...and though writing for the money involved in one of those bubbles is not necessarily the worse case of feeding yourself with the enriching delusions it comes packed with, I started fearing my actions right after January 2018 when I invested small amounts in crypto.

At that time I was not aware of Steemit, which meanwhile became my sole crypto gainer and I was looking for methods to try and compensate the past years in which I totally ignored this sector. I was involving myself, like the little lazy bitch I am, into the FUD of the bubble and I wasn't even aware of what FUD is. Totally uninstructed in the ways of the market (or any market that is) I was watching in March how my investments are halving themselves... then they were a third of my investments and now...well, they are there but totally not worth to sell. I now just stay, as the little bitchy victim I am now, and watch as everything goes into flames, thanking myself that I didn't invest more than I could lose. That's a golden rule that applies not only to money investments but also to time investments because newsflash! : TIME is MONEY!

This guy, Charles Mackay, was somehow, an English journalist in the 19th century but he really showed his skills through the writings he managed to compile in 3 books aiming to study the social behaviour of masses. He didn't stop only on the economic bubbles studies but he also went on and checked connections between things like "haircuts and their influence by politics". He is definitely not the biggest writer of his century but his book (or part of the first volume) on the 3 economic bubbles he studied, still is one of the most important ones about the frenzy of people in front of potential, huge gains. It is intensely recommended by a lot of economists because it makes you see that people identified these social behaviours since at least the 19th Century but it seems education, on a personal level at least, did not improve in more than 100 years as it seems these generations continue to make the same mistakes our ancestors did. Even if there are books describing events that are developing the same as they didn't in other, similar cases, it seems that the human society can't learn how to avoid mistakes like that.

Of course, it's impossible to learn anything from the past as long as books like this one are not translated into your language. How can you even tell children to read about these harmful schemes if there is no version in your own language? I had to bring the damn book from America in order to read it "on the paper" - I don't really like the digital alternatives nowadays.

But, reading this at 32 didn't help a lot. The harm has been done and maybe the only good thing out of this is that I'll tell my kid to read it when it comes of age and when she'll understand English well enough in order to read it. That's because it's not easy to read a book in the English language of the 19th Century... even if it's adapted "here and there" the way it is written and the expressions used (a lot!) make this thin book a pretty long one. You have to come back often in order to understand what he wanted to say or even go look for the words you don't know.

Mackay describes here 3 bubbles that turned the social and economic order of that certain nation, upside down in just a few days:

1. The Mississippi Scheme - this is practically the best example when it comes to "new, unexplored things that promise so much wealth that tens of thousands of souls believe in it"; it's not technology but at the time it happened (early 18th Century) the exploration of North America (and generally the New Land) was in its first stages still and people wanted to believe that the wealth they will find on this "new realm" will be enough to engulf all of the Old Continent in unbelievable wealth. The guy behind all of these happenings (I'll not go into the details of the scheme) was the Scotsman John Law, the guy who practically introduced the use of "paper money" in France. He was so loved by Louis XIVth that he was allowed to open a private bank which only functioned in the base of Government bills, nothing more than promissory paper guaranteed by the French State. From this, all the extension of this Bubble of the Mississippi Company (that also incorporated the famous West Indies Company and the Company of China plus many others), grew up in a total frenzy among the people looking to get a fast profit based on the lies and the wrong appreciation of the profits the company will make in the following years. Sounds familiar?
2. The South-Sea Buble - while being in constant war with Spain, the English invented a company that was supposed to take the cherry on top of the cake of trading with the colonies of Spain in South America. But that never happened because they were in a total war. At least during the 18th Century, that is. The mere perspective of this possibility became the most powerful reason for the whole of England to invest in the company. Bribery and trading based on inside information were the main key aspects in this bubble and while the soul of the whole deal was to reduce the national debt, instead it made it deeper and deeper until the whole castle of cards went down tumbling like dry sand. The bubble went so deep that based on the shares people were buying, they could receive loans and those loans would be used for buying more stock. There were so many economical-ill circles closing at a certain moment in time in the South-Sea Bubble that not seeing the flaw of the system would have meant you were either blind and deaf or totally ignorant and badly intended.
3. The Tulip Mania - while many don't really consider this to be a clear economic bubble but rather an example of how speculation works among societies, the Tulip Mania that took place in the Dutch Republic, the no. 1 economy of the time, in the 17th Century. This didn't really affect the realities of the economy of the State but instead became something like "the star" of the economic bubbles all over the world and throughout time. Maybe it's because of the object of the buble: the Tulip bulb, a rather normal flower for us, earthlings of 2018. It may be that in the future we will check and study the case of "the Cryptocurrency bubble" while spending our money on the blockchain as a rather normal thing to do, without the frenzy we experienced during the small time "it bubbled". The Tulip Mania is a very interesting case to read about, especially if you read about it in the book of Mackay: you will discover a rather intrigued author, even though the case happened about 200 years prior, as he goes through the games people went to in order to fuel this delusion and the lengths to which prices of some bulbs got. Mackay even goes on and manages to find a list of commodities and the quantities that would pay for some of the "special bulbs" during the crazy years.

I guess I really found myself in the mistakes normal people did in front of the schemes proposing riches beyond measure. As I was reading the book of the guy that lived in the 19th century I couldn't stop thinking that if he would wake up today, he would most probably be a little more cautious than I was when I decided to invest during the hype.

 

 

  Posted also on my blog www.ddma.ro, a place on the world wide web where I'm trying to promote Steemit, my writings and my country. In that order. I post through the @steempress-io plugin and I make my life easier (writing and formatting in Wordpress is much easier than on steemit.com or busy.org)