Hi! Thanks for coming on.

the British bicycle mania of the 1890s

Please tell me more. Was this just a matter of speculation, or was there genuine mass use of bicycles as well as purchases?

Thank you for stopping by AH, Dr Quinn.

I am curious as to why you feel that the Dutch tulip mania "doesn't count" as a bubble. Other authors, such as Kindleberger, consider that it was, and I've always found the efforts made by writers such as Garber to suggest that the pricing of bulbs in the 1630s was fundamentally rational to be less than convincing. Can you elaborate on your thinking in this regard?

Thank you Dr. Quinn for taking the time.

From all the historical bubbles you’ve studied, what were some qualitative and quantitive commonalities in most (if not all) of them? Do you see the same symptoms in today’s world?

Hi! Thanks for doing this.

My personal interests lie in history much more ancient than 1720s, so I tend to pay attention more to things like Mansa Musa's trip to Cairo and the inflation that occured as a result of his largess, and the impact of Spanish gold on the Imperialist-era economy of Europe, but you're saying that the large fall in price comes with no "obvious cause" for it to count as a proper boom-and-bust cycle.

Given my shaky understanding of the American housing crisis and my even looser understanding of how Roman apartments worked during the Republic (and how many records the Romans left), I'm a little surprised that there isn't more evidence of ancient boom-and-bust cycles. Do you have any speculation for why this is apparently a modern phenomena?

Hi Doctor Quinn, thank you for doing this AMA! During the earliest bubbles, did anyone recognise that the price increases were unsustainable? Did people predict the bubble bursting?

Hi, from my understanding the South Sea bubble had key figures responsible for the mayhem (it was Walpole). Are there any other bubbles that had mischievous actors significantly responsible for what happened?

Hello Dr. Quinn, it's nice to see such a subject come up here.

You are talking about some bubbles being fairly benign but in my mind, when a bubble explode, there is money technically disappearing "overnight" and it is bound to have some repercussions on the economy, even if it's indirectly - like a landowner having to increase its rents to make up for the lost money.

How can a bubble not affect the overall economy or even have benefic effects?

Hi thanks for doing this.

Who generally suffers the most from these bubbles? Is there a general trend in the solutions that have been used to recover from the crisis after a bubble has burst?

Thanks to everyone for your questions, I've had a great time chatting with everyone. It's getting late so I'm going to get to bed, but I'll check in again in the morning and answer a few more.

What's common between different bubbles that have burst and what may be something that's unique about some (maybe the recent ones)?

Also, have there been instances when a bubble was identified in hindsight but it never burst or rather just sizzled?

Thank you!

Are bubbles black swan events that can't be predicted? Or can they be predicted? If they can be predicted, what are some indicators that you can look for?

(Sorry if it's a dumb question, my only knowledge of financial bubbles comes from the movie The Big Short which is about a few individuals who saw the 2008 crash coming).

The Australian land boom you mention coincides with the process of federation of the Australian colonies. Did the bubble or its effects play a particular role in shaping federation?

I have a more general question: are all developed economies damned to be cyclical? There's so much discussion in politics about economic policy but in the end it seems like there's recession every 5-10 years brought on by one thing or another.

Have you identified any historical occasions where people thought there was a bubble, but the asset was actually not as overpriced as people thought and it did not crash?

What is your background Dr. Quinn? Economist or Historian? What fascinated you so much about the topic that made you decidate so much time to writing a book about Financial Bubbles. I've tried to read a lot of economics focused literature in the past and I've always been a little dissapointed in the lack of macro economic theory/metrics being referenced. (I also love graphs.. Haha)

Thank you in advance if you do respond.

What is the most common mistake people have made throughout history during bubble bursts?

When did we come up with the idea of "bubbles"? How has our understanding/response changed from before/after we slapped a label on it?

Hello! Thanks for stopping by to talk today about your work. Always great to hear from another scholar! 😁

Although I don’t have a question about financial bubbles in particular, I was hoping you’d be willing to talk about your and your co-author’s process while writing this comprehensive of a work. What made you decide to cover so many different types of bubbles across different continents of multiple centuries? Were there any particular difficulties with working with such disparate material? Did the material lend itself to universalist discoveries, or were different socio-cultural factors affect each bubble differently?

Hopefully these questions can provide some interesting discussion, and congratulations on the publishing! Thanks!

Dr. Quinn, how would you compare the parts malfeasance and greed/stupidity play during a boom? For example, I am incredibly frustrated by downplaying things like obfuscation of risk and sidelining the risk management units during the 2000s housing boom. But should I be?

Was Marx right to predict that capitalism would inevitably, catastrophically fail?

Thank you for doing this!

What economic tools/methods/techniques did the pre 20th century economists have at their disposal to identify with substantial evidence ( relevant to their times) any potential bubble?

Are there instances in that period when a potential bubble was identified and downsized before its repercussions hit the market? How did they achieve that?

how did people not catch on to the shenanigans keeping the south sea company afloat? pun intended

What do you think about the Austrian model of the business cycle from Mises and Hayek and how artificial low interest rates and government stimulus cause large booms, creating malinvestments that make busts harder and longer?

Was the decline of Egypt in the Bronze Age not accompanied by a bubble?

I look forward to reading about the Australian land boom, as it's a very important part of my period that I've never truly gotten my head around.

I was wondering how the international nature of some of these bubbles affects how you study them. So to take Australia as an example: how do you follow chains of causality when you have a crisis that hits six autonomous economies but where so much of the disaster takes place in the City of London? How do you begin to identify what matters when you have so many different sources- dozens or hundreds of banks and finance houses, seven legislatures, probably thousands of newspapers and so on.

Hello Dr. Quinn! Very cool AMA so far, and I'm excited to read this book when it comes out. I'm not an Economics Major, but I do love reading and listening to materials on this topic, especially "The Big Short". Also, congratulations on getting this published in Cambridge University Press, I've heard that's no easy feat!

First question: Due to the interconnection of a lot of the world markets, especially with instant electronic trading and massive amount of global trading, are bubbles and busts more frequent? Does the interconnectedness of world markets encourage overweighing the value of particular assets?

Second question: In your research, did the asset bubbles typically require government action or intervention like the 2008 mortgage crisis?

Thanks for taking your time for this AMA!

Thank you Dr. Quinn. I was wondering what your opinion is of the effect of an increased pool of investors in a market in which they make uninformed investments because "everyone else is doing it and making so much money." A couple of examples come to mind like the dot com bubble and the subprime mortgage crisis, where large swathes of the public speculated in certain investments, internet stocks and mortgages respectively. Do you think an essential part of mania and bubbles is an increase of involvement of the general public?

Great AMA, thanks! Looking forward reading your book, wonder if you see any trends in history of bubbles, how they change in their nature? What do people and governments learn from them and how (if at all) this correlate with development of economic science?

Hello Dr. Quinn,

Where do you stand on the Dutch "Tulipmania"?

I'd always heard that this was the first (and perhaps quintessential) bubble... and most historians have followed this.

But recently the description of this as a bubble has been criticized. What do you think?

I've recently started reading this financial textbook, McKinsey: Measuring and Managing Value, in my spare time to learn more about microeconomics, and I was a bit confused by one of their descriptions of the great recession.

They refer to the dotcom crisis as a valuation bubble and note that it related to a lot of hype and misapplication of the network effect, but then when discussing the great recession, they specifically refer to it as an earnings bubble. I was curious what the latter meant and how it differed from a bubble resulting from overvaluation.

Is there a comparable setting in history regarding the disconnection of ownership and allocation of financial assets that we can see the days and, if yes, what could we learn from it? (For example, my pension savings are managed by my employer who gives them to Allianz who invests it wherever, even in hedge funds that by far don't follow any of my moral standards.)

Dear Dr Quinn, thank you so much for doing this! I have two questions. Do you know of any interesting datasets to examine for the bubbles that you’ve studied? Have you studied micro bubbles? If so, what are your insights on them? Thank you!

Why do the tulips not count?

Do you consider the “market cap to gdp” ratio a good indicator for a forming stock market bubble? I’ve been following the trend in the last 3-4 years and I noticed that it spiked to highs we haven’t seen in fourty years.

Everybody’s talking about investing but I’m just sitting in the sidelines thinking : “is everyone crazy? Everything points to a bubble about to burst.”

I would love to hear your opinion.. and thanks for the AMA!

What is your view on negative interest rates?

Hi Dr. Quinn,

Thanks for doing this.

I was wondering if you identified some warning signs that people back then should have paid attention to but didn't. Knowing this might benefit people today.

Any thoughts on the impact of algorithmic trading on the creation of bubbles? it's a new technology that fundamentally changes the way that big institutions trade

Thanks for hosting this AMA, Dr. Quinn. My question is: Is there any instance of a government actively trying to maintain a bubble, and how did it go/what do you think would happen?

Around 1971 there was a massive shift in the economy which began to marginalize hourly workers, stagnating wages while productivity and profits skyrocketed. Prior to that year wages, productivity, and profits were paralleled. Was there anything significant happening that would cause such a rift?

what period or periods of history are ignored by schools or whatnot

Did you have a childhood pet?

Does your book include The Mississippi Bibble and John Law/Louisiana?

Would you find the causes associated with the 2000s housing bubble and the English South Sea Bubble comparable?

How much does social psychology on the part of consumers play in financial busts in relation to suppliers creating demand?

Why is it that so many financial crisis’s end up repeating themselves down the line? How come the stock market never seems to learn its mistakes?

Hello Dr. Quinn. Very interesting AMA, glad to see you on here!

What do you think about the response to the 2008 crises? It seemed the housing bubble had popped but in previous eras policy makers seemed to be more apt to simply letting the bubble pop. What makes 2008 different is it appears that they attempted and possibly succeeded in simply reinflating the housing bubble through money policy and the bailouts. Do you think bubbles should be allowed to pop? And do you think that the buildup of credit card debt, student loan debt, and medical debt are other bubbles simply waiting to be popped? Thanks!

Hi Dr. Quinn! I find this a fascinating read because I've recently tried to develop an interest in economics, and this gives me a lot of information to look into.

I realize I found this thread a bit late, so I hope I haven't missed the answering period.

In an earlier reply, you mentioned that the increase in the number of bubbles post-1980s might result from technological increases making speculation, buying, and selling assets easier. That makes sense to me, but I'm curious about the shift in political economy which happened during (and then after) the 1929-1970s period. From my (limited) reading and understanding, Western nations deliberately enacted policies to limit and regulate capital during that period. That political economy was replaced by a more "finance friendly" political economy which has been developing since.

My question is: Are there similarities between the pre-1929 political economy and the post-1980s political economy which make the number of bubbles in recent decades a quantitative difference rather than a qualitative difference? Or are the political economic structures so different that the bubbles now, or perhaps the frequency of the bubbles, are actually qualitatively different?

I apologise if the question is hard to understand or doesn't make sense, as I mentioned economics is not a subject which I really understand. Thanks so much for all the work you put into the book and answering the questions!

Are we actually in danger of devaluing our currency (USD) through over printing, or is that Wall Street alarmism? If it is a danger, what would likely happen? Is there a such a thing as a currency bubble?

Other than the 2008/9 housing market down turn have there been any other times that the house market specifically has crashed?

What is the link between an increasing spread of the overly wealthy and the poor and the development of bubbles?

Dr Q. What are your thoughts on modern monetary theory? We are already engaging in coordinated fiscal and monetary policy. What does it take to fully implement MMT?

I've heard some call for a second Bretton Woods style 'surplus recycling' mechanism to remedy the social instability and sometimes wars, fascism that can ride on the wake of bubbles. You have a view on that?

Can you talk about how monopolistic power is well suited towards crashes, and bubbles, and in fact make money from disaster and lose pesky competitors?

In relation to the first question, can you talk about how monopolistic power creates a bubble crisis by oversupply of the economy?

Have there been bubbles that didn't pop but merely receded back into the background without a big ol' bust? Or do all bubbles pop?

Do you think that the market is linked directly to the psychological state of the group it serves? Best example is the great depression after WW1. If so it seems bubbles and pops could be understood through the mental/emotional health tools available to that industry. Whadya think?

Hi! Thank you for your time.

This seems like an odd question, but what are your views on Elon Musk. Let me explain

I have been noticing a huge cult of personality surrounding Elon. I am not an engineer but he does frequently see to make bold claims and then later retract/change them and Tesla as a company generally isn’t very profitable despite the fact that it’s stock has increased dramatically over the years. It is also very clear that his claims about neuralink are incredibly unrealistic. Because he is reaching into many industries and acquiring huge government contracts, despite these dubious claims, are we likely to see a sort of Elon bubble burst in the future

How would you have a society prepare for the impact of the highly improbable scenario within economics? I.E: what pre-emptive steps do you think are needed to be taken to limit the losses of a possible ’black swan’-scenario?

Hi Professor,

Something that received a small mention in one of my courses last semester was the Stagflation of the 70s my understanding is that sorta similar to the Great Depression there’s a bit of contention as to whether it was the policy or the war that saved the economy (Am I right here? I haven’t read up on that in quite some time but that’s how it was presented to me) but back to the 70s there’s contention that Reagan did anything to stop it other than not sink the economy and that simple economic forces undid it. What’s the currently accepted history for that and does your opinion differ? Sorry if this is a bit rambly it’s 3 am for me haha

I’d love any and all correction and clarification

Thank you!

I've always been under the impression that in nearly all of the major recessions or depressions in the history of the United States going back to the civil war the root cause at some level was the bank Goldman Sachs.

What is your take on cluster development around a potential bubble? I often see public sector actors saying "oh man! Look at how well <sector affected by bubble> is doing! We should be Accelerators and incubators and trying to amplify this situation." Do you think there is a lag that policy makers should let occur to see if it is a bubble before investing in support infrastructure? Or is that just an exercise in futility?

In which countries was the tulip bubble present? Did it extend to any other flowers? Was this considered a major historical and cultural event at the time? Thanks <3

What are your thoughts on how the recovery from 2008 went down? In particular, what long-term impacts do you see from quantitative easing and the subsequent failures related to main street's recovery and debt paydown in the US?

Hi Dr Quinn, how much (if at all) did the great trading companies -EIC and the Dutch VOC, Portuguese etc- have on bubbles back in their home economies? More narrowly could their trades in silk, tea, spices, cotton etc be considered a boom if it was a first introduction to a market ? Thank you for your time !

Hello! Thanks for doing this! I did my final years’ project/thesis at middle school comparing the 1930s crisis to the one of 2008. Mind you I was 16 then.

What I found when I got deeper into the topic is that the economic system is truly fucked up in some areas. It got me a bit negative.

My question is, Do you think the whole system will eventually implode on itself or do we keep believing in that it will all work out in some way?

Hi! Thank you for doing this. As I recently watched the film The Big Short, I am curious to get your opinion on what happened surrounding the housing crisis and how it could have been avoided. Also, did we learn from it and are there indicators or procedures to take now if we start heading back in a similar direction before the bubble bursts?

Not a bubble, buit i find this interesting:

As i understand the realtionship between wealth, and interest, started in egypt based on corn/grain/rice: wealth (expressed in amounts of grain/corn/rice) had a negative interest since rats and mice would eventually eat a portion of the stored wealth.

My question is this: Would You happen to know what led to turning this in to a positive interest, during what time, etc.

As a second quation: Our current economy is based on a model of infinite growth, which for obvious reasons isn't realistic, nor sustainable. For the time being this is still usuablye, since large regions of the planet are stiil not part of the global economy. Is there a realistic prediction as to when these theories have to be thrown out since they won't match reality anymore? aka when globalisation has been accomplished to a point that there are no more 'new markets'

Are we in an EV stock market bubble rn?

Is college tuition a potential example of an ongoing/upcoming bubble? I looked at your commonalities of bubbles in another comment and I think I can argue college tuition fits them all:

1 Abundant money and/or debt - people have lots of money to invest with. Bonus points if it's someone else's money. Usually this means low interest rates, but it can also mean banks have eased lending standards.

My generation is one with far less kids than my parents. My parents have a dozen siblings between them, while I just have 2. Less kids means more money to spend per kid.

2. Marketability - assets are easy to buy and sell. Most bubbles are preceded by sudden increases in marketability, such as the conversion of untradeable debt into tradeable equity in 1720, or the use of mortgage-backed securities in the 2000s.

Colleges are everywhere nowadays. It's not just the big schools: community and online colleges (with varying prices and reputations) combined with financial assistance allows many if not most people to at least try going to college. This is the "buy" part of getting a college degree. Likewise, it's a brutal fact of life that even non-degree jobs require one as hiring managers use college degrees to easily filter applicants. Colleges degrees are more required than ever in today's workplace, hence the "sell".

3. Speculation - people buy assets for no other reason than because they think the price will go up.

My entire generation (I'm 22) has grown up with the idea that the only path to success is to get a degree. In my high school nobody was ever asked if they were going to college, as the idea of entering adulthood with just a HS diploma is considered madness. Rather they just ask where you're going to, because of course you're going to college. High school these days also heavily emphasize themselves as stepping stones to college: mine was basically a glorified 3-year ACT prep course (complete with practice tests every year to track our improvement) followed by a senior year of fun electives.

In addition, it's just assumed by my generation and our parents that degrees will continue to guarantee jobs and overall life success, regardless of how many more people are getting and thus devaluing them.

4. A "spark" - something that creates an initial price rise, attracting the speculative investors. We divide these into technological sparks e.g. the dot-com bubble, and political sparks e.g. ~all housing bubbles, the 1720 bubbles.

I would argue that the "spark" for college was the post war GI Bill that sent millions of Americans to college post-WWII. Combine that with the general prosperity of the 1950s, and you get the idea that 4 more years of school is all it takes to land a stable, high-paying job for the rest of your life.

I can even see this generational gap in my own family. My grandparents and parents are really proud of me for graduating college, but I don't see it as a big deal. To me, a college degree is just the new high school diploma i.e. something you're just expected to do as an adult, and graduate school is where I'll actually get the "real" higher education that makes me stand out to employers.

Dr. Quinn, do you have any views on the fate of economies that have suffered a 33% GDP year-to-year contraction?

In her book "This Fight Is Our Fight" by former Democratic presidential candidate Elizabeth Warren, she ties the end of the boom and bust cycles of the US financial system to the passing of the Glass-Steagall Act. How accurate is this portrayal?

Hi! Thanks for dropping in.

I wanted to ask how different regulatory regimes responded to the various bubbles that burst over history and did any of them make quantifiable improvement in avoiding such scenarios from occurring again? Or is a financial bubble, by its very nature, unavoidable from a regulatory standpoint?

I once heard someone claim that all major financial crises were in some way caused by the government. Do you know of a good counter-example?

Hi! Thank you for doing this!

Considering every bubble you studied, do you think the only outcome possible was for each bubble to boom and bust eventually or was there something to do to prevent it and / or delete the bubble without its bad consequences?

I just read Ray Dalio’s book “Principles for Understanding Large Debt Crisis” and am currently reading his book “The Changing World Order”. Are there any points that you disagree with him? And if so what are they?

Hello Dr. Quinn, do you think the fundamentals or what causes a bubble are changing with the Age of Information? Do you think that bubbles tend to be pretty predictable?

I appreciate you coming on!

What are your thoughts of selected debt removal or jubilees to combat bubbles?

Thanks for offering the chance to ask questions. Are there any kind of consistent monetary circumstances that need to exist for bubbles to form?

A reminder from the mod team to any readers thinking of asking questions. This is /r/AskHistorians. Please limit your questions to the history of economics.

#If your question focuses on current events... or asks for stock advice... it will be removed without notice.

What mechanisms has our society implemented to stop bubbles? Are they successful?

So if I'm long in precious metals, and other assets I should be fine?

could you discuss how price bubbles in the gold market led to a series of financial bubbles between the civil war and the move off of the gold standard. I think a lot of people don't realize that we moved away from gold to solve major price stability problems.

Why wouldn't the tulips count? Was it misrepresented? Too localized? I would like to know more about it.

One more question if I may:

Dr Quinn, do you have any advice for any budding economic historians out there or any preconceptions about the field that you would like to dispel? When I was doing my economics undergrad, economic history seemed like a very interesting and broad field but it seemed to lose out to more “headline” economic specialisms e.g. financial economics, development economics and the traditional micro, macro, metrics. My economic history professors were great, and I can see why it’s a really interesting field but I’m not sure everyone sees that.

What lasting effects did the mini ice-age have on the global economy? Thanks!

How do you feel about the 10BA film industry boom in Australia in the 80s? And the Australian wine industry boom that was also caused by tax rebates? Do you think they were advisable?

Hello Dr Quinn, I sadly missed your AMA. Hopefully you would be able to answer some general questions I had on the history of financial markets when you have the time. :)

What techniques did "sophisticated" investors in the 1700's and 1800's use to decide which securities were worth investing? And how were they able to access the data used to make that decision?

Louis Bachelier's thesis The Theory of Speculation has influenced much of modern day quantitative finance. However it did not gain mainstream acceptance in Financial Market applications until decades after publishing, was there any attempts to apply the thesis in Financial Markets at the time of publishing?

Finally, I read that Reuters used pigeons to deliver stock prices between London and Paris, how common was such a method of information delivery?

Hello dr. Quinn

Im doing my final thesis in finance right now, writing about DeFi (decentralized finance). What is your view on an ideology based on transparency, decentrlizaton but also out of the hands of people's greed and corruption? Im pretty sure recessions would still occur but maybe they would be more predictable since data is flowing through the sistem freely? Thanks :)

It seems like a decentralized and better informed market is not leading to a more efficient economy; are there examples in history that demonstrate the technology supporting its market making is not as helpful as we believe?