Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe Wisenthal. So, Joe, did
Speaker 1: you know I went to Amsterdam this summer. I think
Speaker 1: I recall seeing some instagrams that look pretty awesome. Okay, well, yes,
Speaker 1: the instagrams were awesome because it's a really gorgeous city. Um,
Speaker 1: but I gotta say they take flowers pretty seriously there.
Speaker 1: I'm pretty sure that's one of the things too that
Speaker 1: I remember from your instagram, Like, and that's sort of
Speaker 1: like they're sort of famous for that, like just gorgeous,
Speaker 1: gorgeous horticulture, horticulture of all types. Yeah, but two lips
Speaker 1: is clearly a big part of that in Amsterdam. In
Speaker 1: Holland is famous for growing varieties of tulips and an
Speaker 1: amster um. They even have a tulip museum that I
Speaker 1: actually went to. I kind of think I know where
Speaker 1: we're going with this, because we're still part of our
Speaker 1: our Bubble series of episodes where we look at famous
Speaker 1: bubbles throughout history, and of course you're talking about Amsterdam tulips.
Speaker 1: That's right, And we actually already teased this one in
Speaker 1: some of our previous episodes. I think I actually called
Speaker 1: it the quintessential financial bubble, which isn't entirely correct, I
Speaker 1: have to say, because although tulip Mania has a reputation
Speaker 1: as one of the first ever financial asset bubbles, there
Speaker 1: are a lot of people that take issue with that
Speaker 1: description and actually say it wasn't a bubble at all.
Speaker 1: It was a rational investing behavior for the time. Yeah,
Speaker 1: it's very controversial because, first of all, it is in
Speaker 1: in this sort of pop culture since probably the quintessential bubble.
Speaker 1: Whenever you talk about another bubble, you always hear people say, oh,
Speaker 1: this is Tulips all over again. So I when you know,
Speaker 1: when we talked about the beanie baby bubble on an
Speaker 1: episode long time ago, like oh, this is the new
Speaker 1: uh tulips whatever it is, people would just sort of
Speaker 1: no tulips. But it is a very controversial episode throughout history.
Speaker 1: Obviously it was prior to a lot of the financial press,
Speaker 1: so there's still a lot of examination of what really happened. Yeah,
Speaker 1: and um, let me just lay the scene, I guess
Speaker 1: before we dig into it. So in the sixteen hundreds,
Speaker 1: tulips became this massive thing in Holland. As we all know,
Speaker 1: and there are these famous statistics about a single rare
Speaker 1: bulb trading for the price of a whole house in Amsterdam,
Speaker 1: or one bulb being worth twelve acres of land, that
Speaker 1: sort of thing. Um, And when we look at it retrospectively,
Speaker 1: we think, why in the world where people paying that
Speaker 1: kind of money for what was basically an ephemeral thing. Right,
Speaker 1: you have the tulip. It lasts for a little while,
Speaker 1: but then eventually the flower dies and unless you grow
Speaker 1: some more tulips out of it, it's this thing. It
Speaker 1: just passes by really quickly. That's absolutely right. But you know,
Speaker 1: like it's funny because obviously supposedly people paid all this
Speaker 1: price for tulip bulbs. But they are really beautiful, so
Speaker 1: sometimes I wonder if he is worth it. I mean,
Speaker 1: they're really nice, and you have to figure, like most
Speaker 1: things didn't look very good back then, you know, everything
Speaker 1: sort of grimy and life was dirty, like maybe it
Speaker 1: was worth it. That's the romantic in YouTube. All right,
Speaker 1: So we're actually going to look at the tulip bubble today,
Speaker 1: but we're going to look at it from a slightly
Speaker 1: different angle. Um. Never let it be said that we
Speaker 1: don't bring you something, uh, something unique on the All
Speaker 1: Thoughts podcast today, we're actually going to be looking at
Speaker 1: the Tulip bubble from a sort of Austrian school of
Speaker 1: economics theory. This should be good. So we're taking one
Speaker 1: of the most sort of controversial bubbles and we're going
Speaker 1: to look at it through the lens of perhaps one
Speaker 1: of the most polarizing schools of economics. So I feel
Speaker 1: like that should be a that's a win combination and
Speaker 1: right there. Yeah, And can I just say the Austrian
Speaker 1: school of economics is the only one that my dad,
Speaker 1: who is my barometer for all things sort of mainstream America,
Speaker 1: has ever asked me about. He never asked me about
Speaker 1: canes or monetarism or anything like that. Only the Austrian
Speaker 1: school economics. I suspect to like this episode. Then, yeah,
Speaker 1: all right with us to discuss the Tulip bubble is
Speaker 1: Doug French. He is the author of a book called
Speaker 1: Early Speculative Bubbles and Increases in the Money Supply. So
Speaker 1: you can sense the Austrian school right there in the title. Doug,
Speaker 1: thanks so much for joining us today. It's my pleasure.
Speaker 1: Joe and Tracy. Let's start with you know, we were
Speaker 1: describing the tulip bubble as the sort of classical market bubble.
Speaker 1: Walk us through some of the mainstream theories behind mind
Speaker 1: why it actually happened. Well, the mainstream theory is typically
Speaker 1: a gentleman by the name of the Gerber, who has
Speaker 1: done a lot of work on to Lokmania, and his
Speaker 1: view is that the rarer bulbs tended to trade higher
Speaker 1: than the more common bulbs, and therefore, you know, it
Speaker 1: was very rational that people would you know, trade up
Speaker 1: to a very high price these more rare bubbles. Her
Speaker 1: these more rare bulbs, I should say. He also would
Speaker 1: throw in the idea that there was a plague and
Speaker 1: that essentially this was it was kness, animal spirits in
Speaker 1: a way that people were just throwing caution to the wind.
Speaker 1: We're all going to die from the plague anyway, so
Speaker 1: let's let's trade in trade in tulips. So that was
Speaker 1: kind of Gerber's view. Another view is a woman by
Speaker 1: the name of Van Bulgar. She wrote a book to
Speaker 1: let Mania there's fairly recent two thousand and seven, and
Speaker 1: she said this is very limited and there were only
Speaker 1: really about four hundred families who were trading involves and
Speaker 1: it was an extension of their art collections. Essentially, she
Speaker 1: believed that it was really no big deal. A few
Speaker 1: people were trading in these bulbs and no one was
Speaker 1: hurt by it. There was no big financial crash that
Speaker 1: we saw someone to say two thousand and two thousand nine,
Speaker 1: and in the United States after the housing bubbles. So um,
Speaker 1: those are generally the it's it's viewed as a curiosity. UM.
Speaker 1: In fact, Charles kenner Barger, who who wrote on manias
Speaker 1: and crashes, um, he he refers to the two let
Speaker 1: Mania is really the first uh Mania, first speckled Mania.
Speaker 1: But he said that it lacked the the financial framework
Speaker 1: that you normally would have. And of course that's when
Speaker 1: when I did my work onto let Mania, looking at
Speaker 1: it through the Austrian lens, as you put it, UM,
Speaker 1: I found out that there was a financial aspect to
Speaker 1: this and um, and that's where the Austrians picked this up. So, Doug,
Speaker 1: I want to ask you, of course, what you see
Speaker 1: as the seeds of to Lippmania. But before I do that,
Speaker 1: for our listeners who are perhaps unfamiliar, give us the
Speaker 1: sort of nineties second characterization of what what Austrian economics
Speaker 1: is all about. So that when we talk about examining
Speaker 1: to Lipmania from the Austrian perspective, what are the key
Speaker 1: ideas and tools that you use to examine this historical episode. Well,
Speaker 1: the key idea that I used from the Austrian school
Speaker 1: was the Austrian business cycle. And that's what the Austrian
Speaker 1: school is is most known for. That's what fa Hiak
Speaker 1: shared the Nobel Prize for nine four UM. He extended
Speaker 1: Ludwig von Mesus work on the on the business cycle,
Speaker 1: and that is that business cycles aren't something that just
Speaker 1: come and go as most people think. They're like like nature,
Speaker 1: like the seasons, things like that. It has to do
Speaker 1: with the government intervention um in the money supply, and
Speaker 1: when in the modern debut of this, the Federal Reserve
Speaker 1: lowers interest rates, expands the money supply, and uh malinvestments
Speaker 1: are created. In other words, entrepreneurs are fooled by the
Speaker 1: low interest rates. They believe that there's a lot of
Speaker 1: savings out there. They believe that there's tremendous need for
Speaker 1: what the Austrians would call higher end UH investments, say land,
Speaker 1: say housing subdivisions, say casinos, things like that, and therefore
Speaker 1: you you get money rolling into uh uh those sorts
Speaker 1: of investments and uh eventually the demand that the entrepreneurs
Speaker 1: thought collectively was there ends up not being there. And
Speaker 1: we see this, just this mass number of errors all
Speaker 1: at once. You wouldn't see this in capitalism. You see
Speaker 1: bankruptcies all the time when um, when entrepreneurs are not
Speaker 1: are not good at what they're doing. But in a
Speaker 1: boom and a bust, booms telling elevate those that aren't
Speaker 1: very good um at at development, and it exposes them
Speaker 1: when the crash comes. That's uh, I think what the
Speaker 1: Austrian school is most most known for. And just as
Speaker 1: a note, the book I wrote, the book that we
Speaker 1: referred to earlier, I wrote under the direction of Murray Rothbard,
Speaker 1: who was a student of Ludwig van Mesas. So I'm
Speaker 1: just carrying on um very long and u and famous tradition.
Speaker 1: So walk us through. So that was a great overview,
Speaker 1: but walk us through how that framework informs your thinking
Speaker 1: about the tulip bubble. Well, as I looked at as
Speaker 1: I looked at tulip mania UM, and I looked at
Speaker 1: obviously everyone's work, and you kind of start with a
Speaker 1: book that a lot of people have heard of extraordinar
Speaker 1: are any popular delusions and the Madness of crowds. It's
Speaker 1: an eight book by Charles Mackay, and people have been
Speaker 1: reading this for, you know, for decades, and uh it
Speaker 1: has a few pages in it about to LITMANI and
Speaker 1: that's generally where people start. And the idea is that
Speaker 1: suddenly people were trading into la bulbs, whether they be
Speaker 1: chimney sweeps or whether they be government officials or whatever
Speaker 1: they may be. And it just you start thinking, well,
Speaker 1: is this is this uh animal spirits in the Keynesian view,
Speaker 1: is it doesn't make sense? In the rational expectations view
Speaker 1: of a of a Gerber who is essentially g it
Speaker 1: made perfect sense. Uh, supply and demand. There were less
Speaker 1: supply of the of the bulbs that were rare. They
Speaker 1: are more supplied other boats, and and those prices didn't
Speaker 1: go up. But I looked for another cause. And it
Speaker 1: turns out that the money supply in Amsterdam during Tolmania
Speaker 1: exploded and exploded for a good reason. It was the
Speaker 1: Bank of Amsterdam was created, and not that it created
Speaker 1: money out of nowhere like modern central banks do. It
Speaker 1: actually offered something called free coinage and free coinage was
Speaker 1: all money from Europe was flooding into Amsterdam because of
Speaker 1: gold and silver discoveries in the New World. UH pirates
Speaker 1: were collecting booty on the high seas. There were coins
Speaker 1: that had been debauched by various kings throughout Europe and
Speaker 1: they were all flooding into Amsterdam because the Bank of
Speaker 1: Amsterdam would in them for little or no fee. And
Speaker 1: that was essentially a that was essentially what created a
Speaker 1: huge boom and the money supply. And when I say
Speaker 1: a huge boom, I mean increase in the supply of
Speaker 1: money right before UH to Lootmania occurred the Dutch economy.
Speaker 1: Obviously Amsterdam's very well located to Seaport, there was much
Speaker 1: commerce going on there. It began to boom in one
Speaker 1: and thirty two. And with all this money UH flowing
Speaker 1: into the economy, it created a a ripe environment for
Speaker 1: speculation UH from all types of people, whether they be
Speaker 1: the gold guards, Mennonite art collectors, or whether they I'm
Speaker 1: not sure there were necessarily chimneys, sweets that we're buying balls,
Speaker 1: but all sorts of people UH as they want to
Speaker 1: do when when things are going good, they want to
Speaker 1: speculate and trade and make a profit. So, Doug, here
Speaker 1: is a question that I have and I've had this
Speaker 1: thought in regards to sort of Austrian theories of bubbles
Speaker 1: even more even more in the contemporary setting. So you
Speaker 1: draw the line between the central Bank or in that case,
Speaker 1: the Bank of Amsterdam creating some sort of ultra loose
Speaker 1: monetary conditions that brings in the conditions where people want
Speaker 1: to speculate. But what I don't fully understand is why
Speaker 1: does it go to these activities that appear so bubbly.
Speaker 1: So it's one thing to say, Okay, that's going to
Speaker 1: create a lot of activity, but why couldn't it theoretically
Speaker 1: go to um more conventional enterprises like opening up you know,
Speaker 1: building new uh building new ships or sort of traditional channels.
Speaker 1: Why does it go towards uh, you know, flipping these assets,
Speaker 1: very speculative vehicles because more people can participate UM in
Speaker 1: trading tula bolts, whereas it would have been more difficult too.
Speaker 1: And I'm sure there was more money was funneled into
Speaker 1: into shipping, but not not a lot of people. Could
Speaker 1: you know, flip clipper ships, uh if you will at
Speaker 1: the time, but you know, if you could get get
Speaker 1: a hold of a tulip here there, Um you might
Speaker 1: be able to um, you might be able to flip
Speaker 1: it by the next the more popular tulip and trade
Speaker 1: from there. These uh, these traits took place in taverns.
Speaker 1: They were called colleges. Interestingly enough, um, the Dutch were
Speaker 1: already very astute in futures markets, in the grains and
Speaker 1: so on, So futures market took hold very quickly. And
Speaker 1: as you can imagine, they weren't trading flowers. They were
Speaker 1: trading the bulbs, and the bulbs were in the ground,
Speaker 1: so before ever anybody ever saw the flower, it was
Speaker 1: being bought and sold many different times. And so I
Speaker 1: think when when people think of Tulamania, they think, oh,
Speaker 1: you know, they were trading these flowers that we're only
Speaker 1: going to be in bloom for a week or whatever.
Speaker 1: But no, they were trading the bulbs that were that
Speaker 1: were in the ground, uh, you know, months before before
Speaker 1: they would see them. And that's why it was a
Speaker 1: fairly short short term. Episode went from essentially six thirty
Speaker 1: four to February of thirty seven. But at the end
Speaker 1: you had this huge blow off top where the wet
Speaker 1: wheat crew and bulb went up thirty five times in
Speaker 1: the space of a month and then crashed, you know,
Speaker 1: in one single day. But that's an answer to your question. Uh,
Speaker 1: you know, the more people could participate um in a
Speaker 1: trading instrument like a tulip bulb. Also two loops were
Speaker 1: fairly new to Amsterdam, although you know, um, as Tracy said,
Speaker 1: the town is is certainly known for it now. Um.
Speaker 1: And you see pictures in the fields of tulips are extraordinary,
Speaker 1: but they were actually shipped in from from Turkey, in
Speaker 1: the Middle East and other places, so they're a fairly
Speaker 1: new phenomenon um to to Amsterdam at the time. Yes,
Speaker 1: and one thing I learned from the Amsterdam Tulip Museum
Speaker 1: is that the tulips were highly associated with Orientalism at
Speaker 1: the time, probably because they were coming through the Middle East.
Speaker 1: So c Joe, I did learn something, Um, I've never
Speaker 1: doubted that something, Uh, Doug, I wanted to ask you
Speaker 1: or just press you on the association between the tulip
Speaker 1: mania and the money supply because you know. One other
Speaker 1: thing I also learned was that the Dutch at the
Speaker 1: time they kind of described this tulip trading as wind handle,
Speaker 1: which means wind trade in Dutch, because no bulbs or
Speaker 1: not many bulbs were actually changing hands. People were just
Speaker 1: kind of trading the futures contracts. So I'm just wondering
Speaker 1: if you're if you're trading this thing, but you're not
Speaker 1: actually trading the underlying what's the association with the money supply?
Speaker 1: Does it track like one for one? No, I don't
Speaker 1: think a track x one for one, but um, it
Speaker 1: does um give people the confidence to um trade in
Speaker 1: in a speculative fashion because there's more money runs into
Speaker 1: uh into an economy. Um, and people see their neighbors
Speaker 1: getting rich and certainly uh they want to as well. Uh,
Speaker 1: they're more apt to get involved in this sort of
Speaker 1: sort of speculation. I mean, when you create money, um,
Speaker 1: there's no telling where it would go and um so
Speaker 1: um whether it goes into goods and services or where
Speaker 1: there goes into speculation. But then the next step in
Speaker 1: this is that then leverages created people want to essentially borrow.
Speaker 1: And as you point out, these bulls were changing hands
Speaker 1: without really changing hands, just the paper was was changing hands,
Speaker 1: and that was essentially that's essentially the leverage that was involved,
Speaker 1: and that happens in all all speculative bubbles. Um, the
Speaker 1: interest rates went down. When you look at the history
Speaker 1: of interest rates by Homer and Encilla, Um, the Dutch
Speaker 1: interest rates declined sharply. Um. There were a number of
Speaker 1: bankruptcies after this. Uh. In my book, UM, you know,
Speaker 1: if it was if people were just trading a few
Speaker 1: evolves and and uh G it didn't work out and
Speaker 1: they all went on about their business, then why did
Speaker 1: the number of bankruptcies in Amsterdam double from nine six
Speaker 1: to sixteen thirty seven. So clearly people were putting a
Speaker 1: lot of resources into speculating in these uh in these bubbles,
Speaker 1: and it had a It had a huge effect on
Speaker 1: the economy. And I will say your timing is excellent.
Speaker 1: I don't know if you know this, but there is
Speaker 1: a movie coming out called The Two Little Fever. I
Speaker 1: would just going to say, I've actually seen that movie
Speaker 1: because I saw a a screening for reviewers and I
Speaker 1: have a review out actually, and so I wanted to
Speaker 1: ask you something about the film, and you talked about
Speaker 1: half of it, but to me was one of the
Speaker 1: most interesting things in there. So as you mentioned, uh,
Speaker 1: and this was depicted in the film. The trading took
Speaker 1: place in taverns, the trading of these essentially tulip bulb futures.
Speaker 1: These were a lot of you know, sort of drunken
Speaker 1: people are very you know, they're they're taverns. However, the
Speaker 1: actual bulbs themselves, and this is according to the film,
Speaker 1: So if I'm wrong on this, please call me out.
Speaker 1: The bulbs themselves were actually uh maintained by nuns in
Speaker 1: an abbey. And so you really have this dichotomy between
Speaker 1: where the finance takes place, which is this sort of
Speaker 1: like dirty, debaucherous tavern, but then the actual product, essentially
Speaker 1: in this house of God. It really showing the h
Speaker 1: the secret and the profane meeting together in this trade. Well,
Speaker 1: I think the uh, either the movie make or or
Speaker 1: MS Mogash took a little bit of license there, uh
Speaker 1: where the with where the bulls were stored. I'm but
Speaker 1: I have no uh direct knowledge to refute that. So
Speaker 1: possibly it's true, It's just but it is it is
Speaker 1: a guest. But I've read the book. It's a wonderful book,
Speaker 1: and Steven Spielberg had actually bought bought the rights back
Speaker 1: in ninety nine before the book even came out out. Um,
Speaker 1: and then I think it's changed hands similar to the
Speaker 1: changing hands of a of a tula bulb, if you will.
Speaker 1: And tulip Tulip fever has at a hard time getting
Speaker 1: off the ground, if you will. But it has a
Speaker 1: wonderful cast. And um, but I think what it depicts,
Speaker 1: I hope it depicts. And and Joe, maybe you can
Speaker 1: confirm this since you've seen the movie. But this artist
Speaker 1: who has an extraordinary talent, and of course his subject
Speaker 1: is the love of his life and um, and of
Speaker 1: course that creates tensions since she's married to an old
Speaker 1: evil guy. Um, but he drops his trade to trade
Speaker 1: in tulips. He thinks they're going to get rich and
Speaker 1: live happily ever after trading tulips. And that's what happens
Speaker 1: during booms and bus uh. And I'm sure it happened
Speaker 1: during Tulamania. We saw this in Vegas when houses boomed
Speaker 1: in the Men two thousand's, people who had perfectly reasonable
Speaker 1: jobs suddenly became realtors or house flippers, were um door
Speaker 1: or became mortgage agents. And that's what happens, uh in
Speaker 1: all boons. That not only there's not only the trading
Speaker 1: of the bulbs or the trading of the instrument. Uh.
Speaker 1: But but people whose talents are best left for, um,
Speaker 1: other things, they become involved in this boom. And I
Speaker 1: think it portrays that. That's a great point that was
Speaker 1: portrayed in the film, and that didn't click to me
Speaker 1: at the time. But of course, as we've seen through
Speaker 1: many bubbles in history, it does seem to be a
Speaker 1: common phenomenon, whether it's day trading in the late nineties,
Speaker 1: house flipping prior to the two thousand and eight financial crisis,
Speaker 1: whatever it is, there are always stories of people leaving
Speaker 1: their jobs essentially real resources, human resources being sucked out
Speaker 1: of where the most to engage in speculation. And that
Speaker 1: is indeed one of the points in the film. So
Speaker 1: I'm glad you brought that up, because that specific facet
Speaker 1: hadn't clicked. A misallocation of human and financial capital. Absolutely,
Speaker 1: they're both malinvestments. You had a malinvestment of of probably
Speaker 1: too many two loops were planted, um too many two
Speaker 1: loops were cultivated, and then you had the talent of
Speaker 1: individuals being siphoned off into this spacoidive area. And as
Speaker 1: Joe said, the same thing happens in all booms. Now,
Speaker 1: before we go One of the common themes things that
Speaker 1: we see with bubbles is that, you know, they can
Speaker 1: be based on sound fundamentals and they often several years later,
Speaker 1: can justify themselves. So obviously, you know the internet bubble
Speaker 1: of the late nineties, we know the internet did in
Speaker 1: fact turn out to be a big deal. The housing
Speaker 1: bubble did create a large housing stock, and as trace
Speaker 1: you mentioned in the introduction, Amsterdam today, you know it's
Speaker 1: still you know, there's a flow, a thriving, beautiful flower
Speaker 1: market still in Amsterdam. So what is the aftermath? Okay,
Speaker 1: then the bubble eventually crashed. You mentioned the bankruptcies. How
Speaker 1: did things eventually stabilize? Well, uh, Amsterdam obviously was a
Speaker 1: city that would eventually continue to thrive. The Bank of Amsterdam, however, changed.
Speaker 1: It had a very hard money policy. As I mentioned,
Speaker 1: free coinage. People would put their money in the bank, um,
Speaker 1: and so it was a hundred percent in bank, to
Speaker 1: which saw Austrians we we like that sort of thing
Speaker 1: rather than fractionalized banking that we have today. Um. But
Speaker 1: eventually the Bank of Amsterdam would begin to loan out
Speaker 1: their deposits and engage age in fractionalized banking and Uh.
Speaker 1: That Uh, that gave an idea to a gentleman by
Speaker 1: the name of John Law who would create a hundred
Speaker 1: years later, or about a hundred years later, the Mississippi
Speaker 1: Bubble that didn't spawned the south Sea Bubble. Uh. And
Speaker 1: I'm not sure you've gotten to those episodes yet, but uh,
Speaker 1: actually TULIPMANI in the Bank of Amsterdam is somewhat of
Speaker 1: a genesis for a gentleman named John Law. Well, I
Speaker 1: think that is a perfect way to end it. And Tracy,
Speaker 1: I think we have definitely have an episode that we
Speaker 1: have to do now. Yeah, so many bubbles, so little time.
Speaker 1: Doug French uh, the author of early speculative bubbles and
Speaker 1: increases in the money supply, thank you so much for
Speaker 1: joining us. Well, thank you, it's been a real pleasure.
Speaker 1: So Joe, I thought that was really fascinating. And I thought,
Speaker 1: you know, even though the Austrian school gets a lot
Speaker 1: of bad press, it's clearly had, you know, something of
Speaker 1: a revival or many people think it was vindicated after
Speaker 1: the two tho financial crisis. So I think it's really
Speaker 1: important to kind of consider some past bubbles, especially a
Speaker 1: bubble as important as the Tulip Mania through that framework. No,
Speaker 1: I totally agree. I I really enjoyed that. And it's interesting, Like,
Speaker 1: I think there's no question that in sort of mainstream
Speaker 1: economic discourse, Austrianism is considered to be crankish and all that,
Speaker 1: But it does seem to be to me that there's
Speaker 1: like a I would call it a soft Austrianism that
Speaker 1: is fairly common. I mean, if you go back to
Speaker 1: our episode two weeks ago with Scott Nations, he specifically
Speaker 1: identified low interest rates as being um something that was
Speaker 1: characteristic of all of the major US stock market bubbles
Speaker 1: and stock market crashes. And I don't think there are
Speaker 1: many people. I think a lot of people who would
Speaker 1: consider themselves mainstream would identify easy financial conditions as being
Speaker 1: an important factor in the rise of many bubbles. Yeah,
Speaker 1: there's a little bit of Austrianism in in all of us, um,
Speaker 1: but especially me because I am actually half Austrian. UM.
Speaker 1: But in all honesty, I think that there's an emotional
Speaker 1: allure to the theory, right, Like it kind of touches
Speaker 1: on something that we've spoken about before, which is that
Speaker 1: when you have a bubble, you have this period of
Speaker 1: time where you can make a great fortune very quickly,
Speaker 1: or you can lose a lot of fortune very quickly,
Speaker 1: And that kind of touches on this idea that it's
Speaker 1: sort of all being controlled by expanding or diminishing money supplies.
Speaker 1: So you can see how people would make that connection.
Speaker 1: Totally one of my issues with it, and maybe I
Speaker 1: should have brought up with Doug when he was here,
Speaker 1: because I don't want to criticize the theory that giving
Speaker 1: him a chance to respond. I've often found that there's
Speaker 1: a bit of um when all you have is a hammer.
Speaker 1: So you know, it's like there's this very distinct view
Speaker 1: that the sort of the errors and the male investments
Speaker 1: in any economy are caused by easy monetary policy. And
Speaker 1: so then there's like I've always thought there's perhaps a
Speaker 1: bit of a you know, going back and sort of
Speaker 1: always finding why it's a monetary policy phenomenon because that's
Speaker 1: where your worldview is based, which you know, and so
Speaker 1: everything sort of gets shoved into that. Nonetheless, I did
Speaker 1: think his perspective is interesting, and either way, the tulip
Speaker 1: bubble is a fun one to discuss. Yeah, and now
Speaker 1: we're well, you've seen it already, but everyone else is
Speaker 1: going to have to go and watch the movie, right, Yeah,
Speaker 1: people should watch it. Look, it's the tulip Mania, it's
Speaker 1: Is it the most amazing film? No? But I'll put
Speaker 1: it this way, if you're an Odd Lots listener, you'll
Speaker 1: probably enjoy it. That's a good way to put it.
Speaker 1: All right, Uh, this is been another edition of the
Speaker 1: Odd Looughts podcast. I'm Tracy Alloway. You can follow me
Speaker 1: on Twitter at Tracy Alloway and I'm Joe Why Isn't All?
Speaker 1: You can follow me on Twitter at the Stalwart And
Speaker 1: you can follow our producer Sarah Patterson on Twitter at
Speaker 1: Sarah pett With two teas. Thanks for listening.