Summary of Famous First Bubbles
The Fundamentals of Early Manias
When rare tulips bloomed in old Holland, the tulipmania bubble flowered and burst, leaving economic myth behind.
During the collapse of the so-called Internet bubble, the legendary Dutch fiscal intoxication with tulips, called tulipmania, was widely cited as a lesson from history. The financial press hyped stories of deluded Dutch farmers who mortgaged all their worldly possessions to purchase a single prize tulip bulb, only to meet financial ruin when the bubble inevitably burst. Economist Peter M. Garber dug into history, and found that most of the common wisdom about the tulipmania was false. So, if you ever wondered how Dutch investors could have been so foolish, there is a simple answer: they weren’t. Famous First Bubbles clearly evolved from a series of academic papers but, nonetheless, the book is entertaining. The primary focus on the tulip bubble makes the sections on the Mississippi and South Sea Bubbles seem like afterthoughts. getAbstract.com recommends this to iconoclasts who enjoy debunking historical legends and to bubble watchers everywhere.
In this summary, you will learn
- Why the oft-used term "bubble" is imprecise at best and a complete mischaracterization at worst;
- The true story of Dutch tulip bulb prices during the so-called tulipmania; and
- Why the Mississippi and South Sea Bubbles are also best explained by market fundamentals, instead of crowd psychology.
Comment on this summary
Customers who read this summary also read
Basic Books, 2012
Friedrich A. Hayek
University of Chicago Press, 2011
Applewood Books, 1986
Scott L. Montgomery and Daniel Chirot
Princeton UP, 2015