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