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Were Tulips Really The Bitcoin of the 1600s? · Ridiculous History

• 0:19
  Speaker 1: Originally it was called the dull band because of its
• 0:27
  Speaker 1: so called resemblance to a turban, and then it was
• 0:31
  Speaker 1: called the tool bent in Turkey, and then it was
• 0:33
  Speaker 1: called the tulip in France, and then in the fifteen
• 0:37
  Speaker 1: seventies it was called the Today we call it the
• 0:41
  Speaker 1: tulip ben. So you're telling me it's not because it
• 0:44
  Speaker 1: resembles two lips pairs together. Apparently, you know, all this
• 0:49
  Speaker 1: is in the eye of the beholder, Knoll. But in
• 0:51
  Speaker 1: this case, the name comes from the resemblance to a turban.
• 0:54
  Speaker 1: That's right, because it came from the continent of Asia,
• 0:58
  Speaker 1: right it did. It came from Western Asia, from Turkey.
• 1:02
  Speaker 1: And the earliest known instance of a tulip flowering in
• 1:07
  Speaker 1: cultivation they were just growing wild beforehand, is in fifteen
• 1:12
  Speaker 1: fifty nine guy named Johann Heinrich Herwart grew the tulip.
• 1:18
  Speaker 1: I don't know if you're a fan of flowers or
• 1:21
  Speaker 1: if our super producer Casey Pegram is a fan himself. Well,
• 1:26
  Speaker 1: casey Pegram is a flower in the desert as far
• 1:29
  Speaker 1: as I'm concerned to rose in the concrete, yes, exactly exactly.
• 1:34
  Speaker 1: So what about you, Noel, are you uh would you
• 1:36
  Speaker 1: say your pro flower. Well, I am, but I I
• 1:39
  Speaker 1: kill them. So I am more of a succulent guy
• 1:42
  Speaker 1: because they're a little more, um, a little more sturdy,
• 1:45
  Speaker 1: shall we say, a k A a little more resilient,
• 1:49
  Speaker 1: and I I don't kill them quite as often, but
• 1:51
  Speaker 1: I still manage. I still manage. Yeah, succulents will be
• 1:54
  Speaker 1: more hardy, for sure. I always thought one of the
• 1:56
  Speaker 1: toughest flowers to grow was the orchid. I only know
• 2:00
  Speaker 1: one person who has a magic touch with orchids, and
• 2:02
  Speaker 1: that's my mother. I don't know how she does it,
• 2:04
  Speaker 1: because she's made of magic. Ben she's made of magic perhaps,
• 2:07
  Speaker 1: and she would be making a mint allegedly had she
• 2:12
  Speaker 1: gone into the tulip game at a certain point in time.
• 2:16
  Speaker 1: Because nowadays it's pretty easy to buy tulips. You could
• 2:19
  Speaker 1: go to your local nursery, you can go to your
• 2:22
  Speaker 1: local even um a hardware store will have some tulips
• 2:26
  Speaker 1: for sale. Often, like I think a dozen or so
• 2:28
  Speaker 1: bulbs I found online for about eighteen dollars or something.
• 2:32
  Speaker 1: And um, you know that's for every possible type of
• 2:35
  Speaker 1: variety you could think of. Um, we're talking about a
• 2:38
  Speaker 1: time where the price of tulip bulbs. We just went
• 2:43
  Speaker 1: completely bonkers, absolutely bananas. So I propose we tackled today's
• 2:48
  Speaker 1: episode in the following way. Let's tell the story that's
• 2:53
  Speaker 1: most familiar to everyone, and then let's after that see
• 2:57
  Speaker 1: how much of this stacks up. You know what a
• 3:00
  Speaker 1: fact in the fiction actually are. It's the only way
• 3:02
  Speaker 1: to do it, Ben, Yeah, alright, So in the early
• 3:05
  Speaker 1: seventeenth century, the Dutch Republic experienced what a lot of
• 3:09
  Speaker 1: people will tell you was the first example of an
• 3:13
  Speaker 1: economic boom and bust. Right. We we know about this
• 3:17
  Speaker 1: kind of stuff here in the US today with the
• 3:19
  Speaker 1: housing bubble that burst in two thousand and eight. We
• 3:22
  Speaker 1: know about this in various other points in time, but
• 3:26
  Speaker 1: people will tell you that the Dutch Republic in the
• 3:30
  Speaker 1: early seventeenth century the six hundreds, experienced the very first
• 3:35
  Speaker 1: recorded economic bust and it was called to Lippmania, to Lipmania,
• 3:41
  Speaker 1: to Lippmania. So what happened exactly, Well, it all revolves
• 3:46
  Speaker 1: around the idea of speculation. Speculation being predicting what something
• 3:51
  Speaker 1: will be worth in the future and placing your bets
• 3:54
  Speaker 1: that it will be worth that or more, and then
• 3:57
  Speaker 1: the bottom drops out potentially when that spec LiTi price
• 4:01
  Speaker 1: reaches completely disproportionate heights with the thing itself. Does that
• 4:08
  Speaker 1: make sense? Yeah? Yeah, and all of a sudden becomes
• 4:10
  Speaker 1: overvalued or people realize it's overvalued for a series of
• 4:15
  Speaker 1: reasons that we'll get into, Yes, yeah, for a series
• 4:17
  Speaker 1: of reasons that can vary depending on the specific cases.
• 4:22
  Speaker 1: In the case of tulips, essentially, the way you'll hear
• 4:27
  Speaker 1: this story pitch is that people in the Dutch Republic
• 4:29
  Speaker 1: went absolutely bonkers for tulips, began paying exorbitant rates for them,
• 4:35
  Speaker 1: that it gripped the country and then eventually that's the
• 4:39
  Speaker 1: sound of a bubble popping. But how do we get here?
• 4:43
  Speaker 1: What made tulips so popular? Let's starts earlier than this fellow,
• 4:46
  Speaker 1: but he's kind of the main dude that really introduced
• 4:49
  Speaker 1: tulip culture into the Netherlands. His name was Coralis Clusius,
• 4:54
  Speaker 1: and he created a very very influential garden at the
• 4:58
  Speaker 1: University of Leiden and that in the late fifteen hundreds.
• 5:02
  Speaker 1: Um he started this kind of tradition among horticulturists which
• 5:07
  Speaker 1: became kind of a gentlemanly pursuit of trading, you know,
• 5:11
  Speaker 1: clippings and seeds and all kinds of you know, tulip
• 5:14
  Speaker 1: related things bulbs between each other in the interest of
• 5:17
  Speaker 1: kind of spreading this tradition around. But it was within
• 5:21
  Speaker 1: a very small set of very particular types of learned individuals, right.
• 5:26
  Speaker 1: But then it kind of started getting a little bit
• 5:28
  Speaker 1: out of control, and instead of just doing trades, these
• 5:32
  Speaker 1: uh folks who had the tulip bulbs started charging money
• 5:36
  Speaker 1: for them, and then members of the merchant class, for example,
• 5:39
  Speaker 1: who wanted to flaunt their new found wealth because this
• 5:42
  Speaker 1: was kind of a relatively new class of people that
• 5:44
  Speaker 1: could afford the finer things in life. In this part
• 5:46
  Speaker 1: of the country, they were experiencing boom times. Um, they
• 5:51
  Speaker 1: decided they wanted to get in on this craze because
• 5:53
  Speaker 1: these flowers were very beautiful, and some of them in
• 5:57
  Speaker 1: particular that had kind of miscolored discolorations almost they were
• 6:03
  Speaker 1: even more desirable. They were like rare POGs or pokemon,
• 6:07
  Speaker 1: and you have to catch them all. Yes. So this
• 6:09
  Speaker 1: this guy, Carolus Clusius, got this whole craze going around
• 6:14
  Speaker 1: fifteen three, and tulips had several strong advantages that made
• 6:20
  Speaker 1: that set them apart from other flowers of the time. First,
• 6:23
  Speaker 1: and we need to emphasize this, as you said earlier,
• 6:26
  Speaker 1: all they had these intense colors that other plants in
• 6:30
  Speaker 1: the area just didn't have. Secondly, and perhaps even more importantly,
• 6:35
  Speaker 1: it turns out that tulips can grow pretty well in
• 6:38
  Speaker 1: this climate. This area the Dutch Republic doesn't have very
• 6:42
  Speaker 1: good soil for you know, most of the country, and
• 6:45
  Speaker 1: it turns out that tulips love what is called poor soil.
• 6:49
  Speaker 1: So not only can you have these beautiful, striking flowers,
• 6:54
  Speaker 1: but you can actually grow them in a successful manner
• 6:57
  Speaker 1: in a place where you know a lot of other
• 6:59
  Speaker 1: flower wouldn't grow. Here's the thing, though, Ben and I
• 7:02
  Speaker 1: didn't know this at all, Um, tulips take a really
• 7:05
  Speaker 1: long time to grow. Yeah, so you can do it
• 7:08
  Speaker 1: with seeds, but seeds. Tulips grown from seeds take like
• 7:12
  Speaker 1: up to six or seven years to grow. And then
• 7:15
  Speaker 1: you have I guess what would be the same as
• 7:18
  Speaker 1: like making a clone of any other type of plant,
• 7:20
  Speaker 1: But it's a bulb. I guess it's called an offshoot,
• 7:22
  Speaker 1: I believe, ben, Um, and those only take three or
• 7:26
  Speaker 1: four years, maybe even two years if I'm not mistaken.
• 7:29
  Speaker 1: And that was what people wanted um. And here's the
• 7:32
  Speaker 1: thing that's also interesting about this whole story is that
• 7:34
  Speaker 1: it kind of introduced some of the concepts surrounding futures trading.
• 7:39
  Speaker 1: Because you're not buying a full grown tulip, because you
• 7:42
  Speaker 1: can't uproot a full grown tulip or it will die.
• 7:46
  Speaker 1: You have to wait until the summer when they go dormant.
• 7:50
  Speaker 1: They literally go back down into these bulbs, and only
• 7:53
  Speaker 1: then can you dig them up. So people, these merchants,
• 7:56
  Speaker 1: these aristocrats, these whomever that we're just going wild for
• 7:59
  Speaker 1: these tulips had to buy the promise of a future
• 8:03
  Speaker 1: tulip right. They would sign contracts before a notary to
• 8:08
  Speaker 1: buy tulips at the end of the dormant season, which
• 8:11
  Speaker 1: was from June to roughly September. That's when you could
• 8:14
  Speaker 1: actually pull them out of the ground. And because of this,
• 8:20
  Speaker 1: the Dutch, who had already developed a lot of techniques
• 8:23
  Speaker 1: of modern finance, created this durable goods futures market for
• 8:29
  Speaker 1: tulip bulbs, and it went insane pretty quickly. You know,
• 8:36
  Speaker 1: because you're not buying tulips today, you're buying tulips tomorrow.
• 8:40
  Speaker 1: Gladly pay you tuesday for a hamburger today only the
• 8:43
  Speaker 1: other way around. And then when you hear that other
• 8:47
  Speaker 1: people in the market are paying increasingly extravagant prices, then
• 8:52
  Speaker 1: you start to move with the market as well, if
• 8:55
  Speaker 1: whether you are selling, whether you are buying, whether you
• 8:58
  Speaker 1: are just trading to look few ts. Yeah, and let's
• 9:01
  Speaker 1: remember too that these were not native to the Netherlands,
• 9:04
  Speaker 1: and so they were already relatively scarce because they take
• 9:08
  Speaker 1: so long to grow. They weren't just overflowing right there.
• 9:12
  Speaker 1: There was a scarcity and a rare quality to them,
• 9:15
  Speaker 1: and that is what drives that kind of gotta have
• 9:18
  Speaker 1: them all mentality, right, Yeah, if anyone could have him,
• 9:21
  Speaker 1: no one would care, right exactly, kind of like hammer
• 9:25
  Speaker 1: Pants in the nineteen eighties. I don't know, I think
• 9:28
  Speaker 1: we're both too young to really deliver that reference. I
• 9:31
  Speaker 1: just remember him, see hammer. So we said fiftee. This
• 9:35
  Speaker 1: is when it starts catching on the early adopters, right,
• 9:38
  Speaker 1: the learned fans of flowered um and horticulture start buying
• 9:43
  Speaker 1: up tulips by sixteen thirty three. In some transactions, tulip
• 9:49
  Speaker 1: bulbs actually replace currency. History Mike Dash found documentation of
• 9:56
  Speaker 1: actual properties being sold for what he said handfuls of
• 10:01
  Speaker 1: tulip bulbs, and then more and more people heard the
• 10:05
  Speaker 1: sort of friend of a friend of a friend's stories
• 10:08
  Speaker 1: about someone who got into the market bought and sold
• 10:11
  Speaker 1: tulips and now they're set for life. And by that
• 10:14
  Speaker 1: same year sixty three, when this stuff is really escalating,
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  Speaker 1: a single bulb of a tulip variety called simper Augustus
• 10:22
  Speaker 1: was already worth five thousand, five hundred guilders. Yeah, and
• 10:26
  Speaker 1: simple Augustus is that one with the with the stripes.
• 10:30
  Speaker 1: It's got kind of red flame like stripes on it.
• 10:33
  Speaker 1: And this is super interesting. Um, it turns out that
• 10:35
  Speaker 1: the what causes that uh condition is actually a virus. Yes, yeah,
• 10:40
  Speaker 1: it's correct. And no one knew how to breed them too,
• 10:43
  Speaker 1: I mean, I've not breeds, not the right word, cultivate
• 10:45
  Speaker 1: them to look like that. So they tried all kinds
• 10:48
  Speaker 1: of crazy stuff, didn't they. Then, Yeah, they tried. They
• 10:51
  Speaker 1: tried a ton of very strange things. They would. Let's
• 10:55
  Speaker 1: see what was one of them. They buried it in
• 10:58
  Speaker 1: a certain type of mud. Yeah, they was pigeon dung.
• 11:01
  Speaker 1: I believe the pigeon guana whatever you wanna call it.
• 11:05
  Speaker 1: Poop there you go, that's the right word. That's the science.
• 11:07
  Speaker 1: That's the science word. Um. They also would even tie
• 11:10
  Speaker 1: like a red and a white together and then bury
• 11:12
  Speaker 1: them in the hopes that they would somehow commingle and
• 11:15
  Speaker 1: create Yeah, tulip ozmosis very much. So. My favorite is
• 11:19
  Speaker 1: that they would sprinkle the soil with pigments that they
• 11:21
  Speaker 1: would hope would somehow seep into the soil. And you know,
• 11:24
  Speaker 1: there was they didn't know what they were doing, no,
• 11:26
  Speaker 1: but they were just trying different things exactly. I think
• 11:29
  Speaker 1: most people at the time would have made similar attempts.
• 11:34
  Speaker 1: Those are just a few examples we know of, but
• 11:35
  Speaker 1: we know that there were many other techniques, most of
• 11:39
  Speaker 1: which were cartoonish failures. And this just made these failures
• 11:44
  Speaker 1: just made the specific types of high end tulips even
• 11:47
  Speaker 1: more appealing. Now we see the market exploding, you would
• 11:58
  Speaker 1: think maybe that by six thirty three someone would have
• 12:01
  Speaker 1: looked around, seen a Simper Augustus bulb and said, I
• 12:04
  Speaker 1: don't think this is really worth five thousand, five hundred guilders.
• 12:08
  Speaker 1: But no, the bubble kept growing. Yeah, and we actually
• 12:12
  Speaker 1: had um situations where these deals were being made in
• 12:17
  Speaker 1: back rooms of like ends and pubs and stuff, and
• 12:20
  Speaker 1: it was all pretty organized. They apparently are these smoke
• 12:23
  Speaker 1: filled rooms where people were getting their drink on and
• 12:27
  Speaker 1: their smoke on, and um, they had like these pieces
• 12:31
  Speaker 1: of wood that they would write they would essentially bid
• 12:34
  Speaker 1: on these tulip lots. And it was like, I don't know,
• 12:38
  Speaker 1: I saw this fantastic video series on YouTube that I
• 12:41
  Speaker 1: was telling you about. Ben I think you had seen too,
• 12:43
  Speaker 1: on a channel called Economics Decoded, And uh, the guy
• 12:47
  Speaker 1: I don't see his name here doesn't really announce himself
• 12:49
  Speaker 1: for lower third himself, but he does a fantastic job
• 12:51
  Speaker 1: with illustrations and sound effects, and I really recommend checking it.
• 12:54
  Speaker 1: It is a three part series on tulimania and he
• 12:57
  Speaker 1: likens it too. If when we I had to go
• 13:00
  Speaker 1: and buy a stock, if we had to literally have
• 13:03
  Speaker 1: a conversation with a bunch of dudes in a smoky
• 13:06
  Speaker 1: room and arrive at an agreed upon price, because we
• 13:09
  Speaker 1: take for granted how quickly information travels these days, and
• 13:13
  Speaker 1: how that's the price of things are just set, it's
• 13:15
  Speaker 1: understood by algorithm, or they change in almost uniform manner,
• 13:19
  Speaker 1: totally uniform. Whereas this was like a series of mini
• 13:22
  Speaker 1: markets in different parts of the country that were pretty
• 13:25
  Speaker 1: isolated because you could only get information to another part
• 13:28
  Speaker 1: as fast as a guy could ride there on a horse,
• 13:31
  Speaker 1: right exactly. That's that's true. That's ah, that's something that
• 13:35
  Speaker 1: we can easily forget in the modern age of micro
• 13:39
  Speaker 1: second transactions and AI quote unquote helping people trade stocks.
• 13:45
  Speaker 1: So the way the story goes is that this craze continues.
• 13:50
  Speaker 1: Um By sixty five, you could see records of forty bulbs,
• 13:56
  Speaker 1: just forty bulbs being sold for one hundred thousand guilders
• 14:00
  Speaker 1: or florins, and by way of comparison at that time,
• 14:03
  Speaker 1: in the same year, one ton of butter costs around
• 14:07
  Speaker 1: a hundred guilders, and someone who was a pretty skilled laborer,
• 14:13
  Speaker 1: someone who practiced a trade of some sort like a
• 14:15
  Speaker 1: blacksmith or a ferrier or something, they might earn as
• 14:19
  Speaker 1: much as one d and fifty to guilders a year.
• 14:24
  Speaker 1: So this is a massive amount of money involved. And
• 14:28
  Speaker 1: I really enjoy the part in the tulip Mania series
• 14:32
  Speaker 1: on Economics Decoded where he walks us through the strange
• 14:37
  Speaker 1: occurrence of February sixteen thirties seven. At this point, the
• 14:45
  Speaker 1: price of a single Simper Augustus bulb that was worth
• 14:48
  Speaker 1: five thousand, five hundred guilders in sixty three is easily
• 14:53
  Speaker 1: worth ten thousand guilders. The center cannot hold. Things are
• 14:59
  Speaker 1: going to fall all apart, right, That's not what shin
• 15:02
  Speaker 1: Chevy was talking about in his book, but you can
• 15:05
  Speaker 1: see how this applies. And so according to this story,
• 15:09
  Speaker 1: the tuliop market crashes very very quickly, and people start
• 15:15
  Speaker 1: to reneg on those contracts that they had signed. So
• 15:20
  Speaker 1: someone would say, look, you, you owe me this much
• 15:23
  Speaker 1: money for these tulips, and they would just refuse to pay. Yeah,
• 15:27
  Speaker 1: And then they got into a real sticky situation where
• 15:29
  Speaker 1: the sellers had the tulips now at that delivery period
• 15:33
  Speaker 1: where they've gotten them out of the ground and there's
• 15:35
  Speaker 1: only a limited amount of time before they are going
• 15:38
  Speaker 1: to not be viable anymore that they have to rebury them.
• 15:41
  Speaker 1: But nobody's like accepting them. People are like, no, I
• 15:44
  Speaker 1: don't I don't want them. I'm not going to pay you.
• 15:46
  Speaker 1: And I think small claims Court got involved where they
• 15:49
  Speaker 1: had to essentially get the courts to help them come
• 15:52
  Speaker 1: up with a system of you know, repayment, uh that
• 15:56
  Speaker 1: was agreeable by both parties and ended up being a
• 16:00
  Speaker 1: mall percentage of three of the price promised or whatever.
• 16:03
  Speaker 1: Because again these futures, and again this wasn't really exactly
• 16:07
  Speaker 1: futures trading. It was sort of like some of the
• 16:09
  Speaker 1: same style of economics as futures trading, but future trading
• 16:12
  Speaker 1: has protections built in that this just didn't. And this
• 16:16
  Speaker 1: is kind of just like the Wild West. And so
• 16:17
  Speaker 1: you wouldn't pay full price and you'd get like a
• 16:20
  Speaker 1: you would get a deal because you're taking on the
• 16:23
  Speaker 1: risk your your tulip might not turn out, and you
• 16:27
  Speaker 1: don't get to just say, oh, my tulip didn't turn out,
• 16:29
  Speaker 1: I'm not gonna pay for it. That's technically not allowed,
• 16:33
  Speaker 1: even though that's kind of what these people were doing.
• 16:35
  Speaker 1: But it wasn't about the tulip not turning out. It
• 16:36
  Speaker 1: was more about the whole system kind of falling. Yeah,
• 16:39
  Speaker 1: and you don't pay full price, you pay a little
• 16:41
  Speaker 1: bit less because you're soaking up some of that risk
• 16:44
  Speaker 1: for the grower. Yeah. Yeah, And there's there's an interesting
• 16:48
  Speaker 1: step here that I want to make sure we don't miss.
• 16:51
  Speaker 1: Because of the precipitous rise the price of tulips, most
• 16:57
  Speaker 1: speculators by sixty seven and afford to buy even the
• 17:01
  Speaker 1: cheapest tulips. And this is what triggered the collapse in demand.
• 17:06
  Speaker 1: And then when the demand disappeared, the flowers quickly became
• 17:10
  Speaker 1: worth maybe ten per cent of what they had been
• 17:13
  Speaker 1: worth the day or the week before. And this this
• 17:17
  Speaker 1: sounds funny, this sounds like some sort of Doctor Seuss parable.
• 17:21
  Speaker 1: But the real time effect and the real life effect
• 17:24
  Speaker 1: of this is that people encountered financial catastrophe. People's lives
• 17:29
  Speaker 1: were ruined when the tulip trade collapsed, and as you said,
• 17:33
  Speaker 1: with the courts getting involved, these vicious fights over debt
• 17:39
  Speaker 1: continued for years and years and years, and thus the
• 17:42
  Speaker 1: tulip Boom and Bust of the Dutch Republic became one
• 17:46
  Speaker 1: of the most well known financial cautionary tales in the
• 17:50
  Speaker 1: Western world until about nineteen eighty when people realized that
• 17:57
  Speaker 1: there might be born to the story. Because it turns
• 18:00
  Speaker 1: out that the story we just we just related to you,
• 18:04
  Speaker 1: ridiculous historians, is primarily based on uh a work of
• 18:10
  Speaker 1: a Scottish journalist named Charles McKay. In eighteen forty one,
• 18:14
  Speaker 1: he wrote a book called Extraordinary Popular Delusions and the
• 18:18
  Speaker 1: madness of crowds. He sourced his story about this uh,
• 18:23
  Speaker 1: this tulip boom and bust from a guy named Johann Beckman,
• 18:27
  Speaker 1: who in sevent wrote a book called A History of Inventions,
• 18:31
  Speaker 1: Discoveries and Origins. And then Beckman's story we trace this back,
• 18:37
  Speaker 1: comes from three anonymous pamphlets that were published in sixteen
• 18:42
  Speaker 1: thirty seven, the same year everything went to pot and
• 18:45
  Speaker 1: they were hit pieces. Ben is slicing the air like
• 18:48
  Speaker 1: a knife with his hand right now, because he feels
• 18:50
  Speaker 1: very strongly about this, and I agree for a good
• 18:51
  Speaker 1: reason hit pieces. Indeed, because he had an ax to grind.
• 18:55
  Speaker 1: He did not like the practice of speculation at all,
• 18:58
  Speaker 1: and neither did McKay um. And even today, this idea
• 19:02
  Speaker 1: of futures is considered a moral by many, and it's
• 19:06
  Speaker 1: a lot of a lot of it is felt to
• 19:09
  Speaker 1: be a type of gambling, because you're making bets on
• 19:12
  Speaker 1: things that you don't actually own, right, you know what
• 19:15
  Speaker 1: I mean. You're taking this piece of paper it says
• 19:18
  Speaker 1: I own the idea of this thing what does not
• 19:21
  Speaker 1: yet exist, and then you're selling it to somebody else
• 19:23
  Speaker 1: for an inflated price based on this imaginary number. That
• 19:28
  Speaker 1: keeps getting higher and higher and higher. It's sort of
• 19:30
  Speaker 1: like subprime mortgages, for example, where um, you keep betting
• 19:34
  Speaker 1: on something and people don't fully understand, you know, what
• 19:38
  Speaker 1: the market is going to do, and then it does
• 19:41
  Speaker 1: a thing that no one quite saw coming. And then
• 19:43
  Speaker 1: all of a sudden, all those bets he made, you
• 19:45
  Speaker 1: gotta pay them, but nobody has the money to pay them. Yeah,
• 19:48
  Speaker 1: the research was not done, and at least in the
• 19:51
  Speaker 1: subprime mortgage crisis, there is overwhelming evidence that several people
• 19:56
  Speaker 1: knew exactly what was happening and just decided to let
• 19:59
  Speaker 1: it happen because you can make money. That's the thing
• 20:01
  Speaker 1: about bubbles, right, if you write it out at the
• 20:03
  Speaker 1: right time, you ride that wave correctly, you can make
• 20:06
  Speaker 1: a lot of money. And we see other examples of
• 20:08
  Speaker 1: this Beanie babies, that's an example. Poggs. I was talking
• 20:13
  Speaker 1: off air awhile back with Casey about bitcoin. Casey, do
• 20:17
  Speaker 1: you remember Do you remember bitcoin? I do remember bitcoin? Yes?
• 20:22
  Speaker 1: Are you are you involved? Are you a bitcoin er? No? No,
• 20:25
  Speaker 1: I I got out of bitcoin a long time ago,
• 20:27
  Speaker 1: so um no, I don't have a stake in bitcoin anymore.
• 20:30
  Speaker 1: But didn't you get out like a little too early.
• 20:33
  Speaker 1: I did. Indeed, Yeah, um, I bought when it was
• 20:36
  Speaker 1: like maybe like a dollar or something per bitcoin. Uh,
• 20:40
  Speaker 1: and then at its height it was worth some crazy
• 20:42
  Speaker 1: amount like maybe close to a bitcoin, but I sold
• 20:46
  Speaker 1: when it was far less than that. There's like a
• 20:47
  Speaker 1: lot of people who have parked way too much money
• 20:50
  Speaker 1: in bitcoin, who have lost a lot over the last
• 20:52
  Speaker 1: several months. It's it's really interesting. It's a really interesting
• 20:55
  Speaker 1: kind of comparison. And there are more bitcoins on the market, right,
• 20:59
  Speaker 1: So yeah, there's like Ethereum, there's there's a bunch, Yeah,
• 21:02
  Speaker 1: there's there's doge coin. Yeah, there's there's all these weird
• 21:05
  Speaker 1: like meme coins. And there's what I was reading about
• 21:08
  Speaker 1: called stable coin, which is literally just pegg to the U. S. Dollar.
• 21:12
  Speaker 1: So it's kind of like, what's even the point but apparently, uh,
• 21:15
  Speaker 1: the ideas you can kind of I don't know, longer
• 21:18
  Speaker 1: money with it or something, so you know, good the
• 21:20
  Speaker 1: world of cryptoe. So so we do see an interesting
• 21:25
  Speaker 1: comparison there. We also know that the tulip story itself,
• 21:35
  Speaker 1: the story of Tulipmania, may have been case of people
• 21:40
  Speaker 1: playing telephone throughout history, based on essentially works of propaganda
• 21:46
  Speaker 1: that we're anti speculative anonymously published pamphlets, and this means
• 21:51
  Speaker 1: that this means that we have more research ahead of us.
• 21:55
  Speaker 1: There are some wonderful books about tulip mania there too,
• 22:00
  Speaker 1: that are both called tulip mania, right, and the authors
• 22:04
  Speaker 1: of these books will assure you and assure us that
• 22:08
  Speaker 1: the phenomenon was actually exaggerated that contrary to what McKay says,
• 22:14
  Speaker 1: it was not a situation wherein every single person on
• 22:17
  Speaker 1: the in the nation, from paupers to royalty, were losing
• 22:21
  Speaker 1: their minds and gouging their eyes out to buy more tulips.
• 22:24
  Speaker 1: Because I learned something in this research is that the
• 22:27
  Speaker 1: Dutch more or less invented the model for the modern
• 22:30
  Speaker 1: stock exchange. So it would certainly make sense that this
• 22:34
  Speaker 1: was something that happened in their neck of the woods.
• 22:35
  Speaker 1: And they also, you know, we're a huge trading empire,
• 22:39
  Speaker 1: and they established New York City and um all of
• 22:41
  Speaker 1: you know, the Dutch East India Trading Company and all
• 22:44
  Speaker 1: of that. I mean, it was definitely in their national identity, right.
• 22:48
  Speaker 1: I think Harlem is originally a town in the Netherlands.
• 22:51
  Speaker 1: Harlem is where the infamous um collapse of the market
• 22:57
  Speaker 1: supposedly happened during that that auction where nobody bid. Yeah,
• 23:01
  Speaker 1: that's Harlem with two aids, right. And another thing that
• 23:04
  Speaker 1: I want to point out too, from from that video
• 23:06
  Speaker 1: series we mentioned, um, the guy in that video series
• 23:10
  Speaker 1: points out something that I think should not be ignored
• 23:12
  Speaker 1: is that gambling was a huge, another huge part of
• 23:17
  Speaker 1: their public their national consciousness. People would make bets on
• 23:21
  Speaker 1: the craziest things. I think. He points out one about
• 23:24
  Speaker 1: a guy who bet that he could ford a river
• 23:27
  Speaker 1: in a tiny wooden barrel or like a like a
• 23:31
  Speaker 1: trough or something like that. And I believe it was Rembrandt,
• 23:34
  Speaker 1: the famous painter, who bet on whether he'd be alive
• 23:37
  Speaker 1: the next year or not. So, I mean, it was
• 23:40
  Speaker 1: definitely a thing that was very popular. So it's almost like,
• 23:43
  Speaker 1: you know, why not, let's bet on tulips. And also
• 23:46
  Speaker 1: we haven't mentioned the fact that the plague was a
• 23:48
  Speaker 1: big part of this, and people's life expectancy was very short. Yeah,
• 23:52
  Speaker 1: it was kind of like, yolo, let's do this, you know. Yeah,
• 23:55
  Speaker 1: And with these important instrumental pieces of context, we can
• 24:00
  Speaker 1: unpack a little bit of the fact versus fiction around
• 24:04
  Speaker 1: tulip Mania. We mentioned people did have their lives ruined
• 24:09
  Speaker 1: financially at the time. That is true, but it may
• 24:12
  Speaker 1: have been far fewer people than McKay would have us believe.
• 24:17
  Speaker 1: In fact, some researchers have found fewer than half a
• 24:21
  Speaker 1: dozen people who experienced financial trouble in that time period
• 24:25
  Speaker 1: during the tulip boom and bust and you'll he'll hear
• 24:29
  Speaker 1: people argue that although prices had risen, money had not
• 24:33
  Speaker 1: actually changed hands between buyers and sellers, so the profits
• 24:36
  Speaker 1: were never realized for the sellers unless they had made
• 24:40
  Speaker 1: other purchases on credit, expecting their tulip money to come
• 24:44
  Speaker 1: in sometime between June and September. So the collapse from prices,
• 24:48
  Speaker 1: the argument goes, did not actually cause a ton of
• 24:51
  Speaker 1: people to lose real, tangible money, just had a series
• 24:56
  Speaker 1: of interesting, increasingly desperate conversations. Yeah, it's actually, um, really
• 25:00
  Speaker 1: cool that we got to do this story because I
• 25:03
  Speaker 1: just the other day was asking my girlfriend's um stepdad. Uh.
• 25:06
  Speaker 1: He's a big Scotch fan, and I was something I
• 25:10
  Speaker 1: think I've always wondered. I asked him, was how is
• 25:13
  Speaker 1: it sustainable to have these Scotches that you age for
• 25:17
  Speaker 1: twenty thirty years or whatever and have that be viable
• 25:19
  Speaker 1: when you need to be selling stuff, selling product right away.
• 25:22
  Speaker 1: And I think I'm explaining this right, but it was
• 25:25
  Speaker 1: another form of futures where you have a certain elite
• 25:28
  Speaker 1: that are investing in barrels, investing in particular lots or
• 25:32
  Speaker 1: whatever of the good stuff, the really long aged kind
• 25:34
  Speaker 1: of fancy stuff that they do in smaller batches in
• 25:37
  Speaker 1: order to finance the quicker turnaround product. And I just
• 25:41
  Speaker 1: thought that was really interesting that this is a very
• 25:43
  Speaker 1: similar example to that, Like, how do you take up
• 25:45
  Speaker 1: something that requires years to actually generate a tangible thing
• 25:49
  Speaker 1: and make that a market where people are actually gonna
• 25:52
  Speaker 1: pay into it, And that's that's how you do. It's
• 25:54
  Speaker 1: very similar to with whiskey. Yeah, wine would be another
• 25:57
  Speaker 1: great comparison. I believe this story, while it does seem
• 26:02
  Speaker 1: to have a cautionary aspect to it, and while it
• 26:05
  Speaker 1: does seem to be sort of a morality tale, we
• 26:10
  Speaker 1: know that it's been exaggerated. It hasn't been completely made up.
• 26:14
  Speaker 1: This really did happen, and I would say that this
• 26:18
  Speaker 1: means it's still functions as a crucial lesson in these
• 26:22
  Speaker 1: our modern days. Don't buy tulips for too much money,
• 26:26
  Speaker 1: you know what I mean? And don't we have to
• 26:28
  Speaker 1: be we have to be very cognizant and very self
• 26:31
  Speaker 1: aware of group think and group panics. Something like this
• 26:36
  Speaker 1: will come along every so often. Oh and another interesting
• 26:39
  Speaker 1: little tidbit I picked up along the way is that
• 26:41
  Speaker 1: what happens when you start um increasing supply over years
• 26:46
  Speaker 1: in a market that relies on scarcity right to create
• 26:50
  Speaker 1: the actual value of the thing itself, all of a
• 26:53
  Speaker 1: sudden it ain't so scarce anymore. And then people are like, well, well,
• 26:57
  Speaker 1: here's a here's another example that's tangentially related, and that's
• 27:00
  Speaker 1: a good point. Noel Opec recently met to reduce production
• 27:07
  Speaker 1: of petroleum, and they did that not because they were
• 27:11
  Speaker 1: worried about running out o reserves, but because the price
• 27:15
  Speaker 1: globally of oil fell too low for their liking. And now,
• 27:20
  Speaker 1: technically speaking, the US is to how you measured out,
• 27:23
  Speaker 1: the US is the world's largest producer. Interesting, right, And
• 27:27
  Speaker 1: that's where future is really coming to play today, is
• 27:30
  Speaker 1: with things like oil, like absolutely necessary tangible goods. Yeah, yeah,
• 27:36
  Speaker 1: it's supposed to tulips, which are kind of like frivolous
• 27:38
  Speaker 1: and if you heard that that money Python sketch about
• 27:41
  Speaker 1: the loopins. Oh yes, more, I think Gabe reminded me
• 27:45
  Speaker 1: of that one too. Maybe we should go out on
• 27:47
  Speaker 1: that because it's such a fun reminder of how third
• 27:50
  Speaker 1: this whole story really is. Let's do that. That's a
• 27:52
  Speaker 1: good idea. Thank you so much for tuning in everyone.
• 27:55
  Speaker 1: We hope that you enjoyed this episode. We want to
• 27:58
  Speaker 1: hear your opinions on other economic crazes and if you
• 28:02
  Speaker 1: had fun listening, let us know in lieu of sending
• 28:06
  Speaker 1: us tulips, why not head over to our Facebook page
• 28:09
  Speaker 1: Ridiculous Historians or dropped by Apple podcast and give us
• 28:14
  Speaker 1: a rating. My fine friends, now false moves. Please, I
• 28:20
  Speaker 1: want you to hand over all the loopings. You've got lupids? Yes,
• 28:24
  Speaker 1: loop ins? Come on, come on, what do you mean loopins?
• 28:28
  Speaker 1: Don't try and play for time? I'm not you mean
• 28:31
  Speaker 1: the flower loop in es. That's right, we haven't got
• 28:34
  Speaker 1: any Lupin's not. My fine friends, I happen to know
• 28:39
  Speaker 1: that this is the loop in. Express your tiny mind.
• 28:44
  Speaker 1: Get out of the coach. So much for the Loopin's.
• 28:50
  Speaker 1: Dan Is mord Is more galloping fruits Ward, dan Is more,
• 28:55
  Speaker 1: dan Is more at stays from the ridge. He gets
• 29:00
  Speaker 1: to the board Mr Moore, Mr Hell y'all, I'll be back.
• 29:06
  Speaker 1: Mr Wore,