Tulipmania is the story of the first major financial bubble, which took place in the 17th century. Investors began to madly purchase tulips, pushing their prices to unprecedented highs. The average price of a single flower exceeded the annual income of a skilled worker and cost more than some houses at the time. Tulips sold for over 4000 florins, the currency of the Netherlands at the time. As prices drastically collapsed over the course of a week, many tulip holders instantly went bankrupt.
Tulipmania (also known as tulip mania) is a model for the general cycle of a financial bubble: investors lose track of rational expectations, psychological biases lead to a massive upswing in the price of an asset or sector, a positive-feedback cycle continues to inflate prices, investors realize that they are merely holding a tulip that they sold their houses for, prices collapse due to a massive sell-off and many go bankrupt. Continue reading from Investopedia
Although fairly uncommon in the history of financial markets, major speculative bubbles have been known to occur from time to time, often with ruinous effects. Sometimes they are triggered by inexplicable phenomena, such as the spontaneous tulip craze in the Netherlands in the 1630s, or are kindled by the manipulative actions of individuals or corporations, as in the case of the 1720 South Sea Bubble. Here are five examples of historic speculative bubbles: the Dutch Tulipmania (1634-1638); the Mississippi Bubble (1719-1720); the South Sea Bubble (1720); the Bull Market of the Roaring Twenties (1924-1929); and Japan's "Bubble Economy" of the 1980. Continue reading from Frontline |
The century from the conclusion of the Twelve Years’ Truce in 1609 until either the death of Prince William III in 1702 or the conclusion of the Peace of Utrecht in 1713 is known in Dutch history as the “Golden Age.” It was a unique era of political, economic, and cultural greatness during which the little nation on the North Sea ranked among the most powerful and influential in Europe and the world. Continue reading from Britannica
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