The Dutch Tulip Mania was one of the very first market manias (bubbles) based on speculation.
New forms of tulips were spontaneously popping up in fields and people with wealth were bidding the prices of these novel tulips to astronomical levels.
It was a time of great optimism and discovery. New species of plants were being found and identified as explorers opened up the Orient. Everything seemed possible, even tea plantations in Ireland!
For whatever reason, the Dutch (a great maritime nation at the time) seized upon tulips as a source of wealth. It was the bit-coin of the day. Tulips automatically reproduce but they do it at a slow, controlled, finite rate (maybe the crypto analogy wasn't that far off!). Demand for the newest types of tulips vastly exceeded the natural rate of reproduction.
The way to prove your status and coolness in Holland in 1635-1637 was to be a "player" in tulips. The "market cap" of tulips exceeded the market cap of all other forms of wealth in Holland at one time. The value of the buildings and farm land and cattle and gold...in sum, were less than the "extended" value of all the tulip bulbs in Holland in 1637. By "extended" I mean the daily selling price at auction extended over the entire crop.
People borrowed prodigiously to buy into a piece of the action.
The gravy-train crashed when it was realized that the fanciful colors and twisted petals and other novel presentations were due to a disease. It was due to virus although viruses were not understood at the time...but the idea of something being sick and contagious was.
Today's prosperity
Crypto is valuable because people think it is.
Healthcare is considered a source of wealth because people think being pregnant is a disease that needs to be corrected with surgery or a pill.
Additionally, Healthcare is profitable because people have been trained to think that angst-y teens' and pre-teens' fantasies must be acted on and it is profitable to cut off their body-parts, sort of like the beggar in Life of Brian.
Social media is valuable because people think that knowing what all 537 of their "friends" are doing on a second-by-second basis is more important than paying attention to the task in front of them. Young women passed young men as the least safe drivers in recent years suggesting that distracted-driving is a bigger problem than drunk-driving.
When you start scratching around, there are many more examples of activities that we were sold are "generators of wealth" might in fact be nothing more than mind-viruses.
I don't think it's a mind-virus so much as it is an attempt at re-calibration of what constitutes value... though I see the similarities (tulips = latest iPhone). Mind you, I'm not in agreement with this, nor is a large swath of the population, but at the center of the debate is what is more valuable, and I feel we are deliberately being forced into making a choice? Today the media seems to be more interested in changing society than merely reporting on it. It feels though there is some force or coercion at the end of the stick? Freedom or Safety comes to mind...
ReplyDelete1 or 2 generations ago, box-wine cat lady's were shamed, today they are lauded while traditional marriage is shunned as as 'waste' for wimmens... in my father's time, the ultimate "life" was to date a couple girls while in HS, get a real job, bag some skirt, raise a litter of kids in suburbia, retire to the beach at 55 and take up golf? Today media suggests you won't be happy unless you're an androgenous 65 year old entrepreneur working 7 jobs, die your hair un-natural combinations, hang fishing lures off your face, and take multiple non-committal partners.
The dichotomy could not be more stark. It's as if someone took every norm of traditional society and inverted it... which ironically is exactly what Cloward-Piven strategy suggests you do to destroy a nation.
What's happening? It's not accidental.
Now watch as people defend the practice, even arguing that you've got it all wrong.
ReplyDeleteEx: I say every run in the market was the result of someone whispering to another. Every sell off, every buy in started with a whisper, a hunch shared. By the time of news stories of possible runs, the trend is in full swing.
Naw, others will say. Its just market corrections, and other pablum.
The widespread availability of mobile phones has had a monumental negative effect on society.
ReplyDelete9,000 kids got messed up. 5,000 of those got chopped up. These are all individual tradegies, but orders of magnitude less than I expected. The aggregate amount of money sounds big, until you realize that healthcare (wow, is that a B.S. word) is almost 1/4 of our multi trillion dollar Ponzi scam of an economy.
ReplyDeleteCrypto will crash but not before a few get insanely rich. Those riches will become meaningless, however, when Weimar-style inflation makes a million dollars a down payment on a used car. It's trite to suggest gold and silver but I would add ammo to that list if I had to make a prediction of what will retain value. We're screwed.
ReplyDeleteERJ, having seen the tulip gardens of Istanbul (which preceded the West by a few years, called "The Tulip Years" in Turkish History), they were rather lovely - although certainly not the basis of actual wealth.
ReplyDeleteBust and boom cycles are nothing new or strange to humanity, although the manifestations of them are. Crypto falls into that category that, if there are historians years from now, they will raise their eyebrows and wonder what the heck we were thinking.
More and more, it becomes readily apparent that the first line of defense for health and healthcare is the individual - not just because of the facts of expense or personal responsibility, but because of how long it can take to actually get the problem resolved.
Between my parents and father in law, all now deceased and all having spent the last years of their lives partially or full in long term care solutions with periodic hospital visits, a rather large sum of money was spent. They had all planned for this; I cannot imagine what upcoming generations who are/have not and seem to be on track for a bevy of health related issues, will do so.
From the post:
ReplyDelete"Healthcare is considered a source of wealth because people think being pregnant is a disease that needs to be corrected with surgery or a pill.
Additionally, Healthcare is profitable because people have been trained to think that angst-y teens' and pre-teens' fantasies must be acted on and it is profitable to cut off their body-parts, sort of like the beggar in Life of Brian."
Do you have any evidence for this? I believe Healthcare is seen as profitable but I can't find anything concrete to suggest that it's due to abortions or trans-surgery to any notable capacity.
I am going to grudgingly agree with what you wrote.
DeleteThere is a much stronger relationship between healthcare costs (approx $10k-to-$12k/person or 17% of GDP in 2023) and the changing work-environment and "recreation" space.
Viewed through the lens of evolutionary time-scales, the shift from most people performing physical work (+2 METS or +150 Calories) for a minimum of eight hours a day, five days a week and the shift from softball, bowling, mowing lawns and similar activities for "recreation" to sitting in front of a monitor at work and then "gaming" and cruising FB and on-line shopping for recreation...that shift was the blink-of-an-eye.
Cardio-vascular diseases, diabetes and dementia are strongly linked to sedentary behaviors. There is also very strong evidence that regular exercise (especially outside) improves Mental Health and digestion and potentially reduces risk of substance abuse. All of those issues are a drag on the healthcare system.
I apologize. I was in a hurry. It was time to wake up my granddaughter and I should have put more thought into essay.
No worries at all, I appreciate the clarification! I think your analysis about physical & mental health is spot-on.
DeleteA successfully retired commodities investor explained to me that while stock in a company can actually drop to zero, real commodities (precious metals, wheat, oil, etc.) may drop precipiously if demand or emotional interest in them drops, but theoretically they cannot cross below zero unless there is a cost for storing the stuff, which is why oil temporarily went negative during the COVID onset. Port cities were willing to pay to have their stocks of heavy fuel oil reduced.
ReplyDeletePhysical commodities can set a price point because when I can possess one particular unit of something that you cannot. You can have another unique instance of the stuff, but it is not a duplicat of the unit that I have. The contrived value of one BitCoin is to possess one portion of a solution to a very, very long mathematical equation. That portion of the solution is only valuable to someon else who wants to know those coefficients more than you do. The value is contrived because the original inventors of BitCoin created the equation out of nothing. Blockchain technology can also satisfy desires of one or both parties of the trade to be anonymous to each other.
Separately, (it'll never happen) but one possible olive branch to extend to the "gun safety" crowd could be the use of blockchain to anonymously validate the desires of both sides of a firearms transaction without creating a de facto registry (which is why it won't happen; de facto registry IS one of their goals) - but the idea would be to anonymously satisfy to the seller that the buyer (a) has the funds, and (b) is fit to possess the weapon, so the seller gets notified of a background clearance and ready fuinds, and then the buyer must be satisfied that (c) the weapon (by serial number) is not stolen property nor an item of interest in a criminal case. The transaction confirmation code would be a way to confirm to government that the legal conditions have been met, but with no ability to identify who just transferred what and where it was or is now located.
Perhaps I am misunderstanding the argument but abortion is understood by its supporters and detractors as a highly profitable industry. Abortion proponents point to this as evidence of its necessity and pro-life advocates see it as a perverse incentive to a horrible act. It is clear to me that abortion stops a beating heart.
ReplyDeleteThe US Dollar is no different. It onlly has value because of people belief that it does. When that belief fails the dollar will become nothing more than fancy linen with green ink on it. The same can be said for ALL fiat/paper currency.
ReplyDeleteI’m not remotely knowledgeable of economics, but always liked ‘70s “survival guru” Mel Tappan’s explanation of “real money”. He said that in 1880 a man could walk into a store with a $20 gold coin and buy a .45 SAA or the best suit on the rack with the coin, and the merchant would throw in a free box of ammo or a necktie with the purchase.
ReplyDeleteIn 1980, a $20 bill would buy neither the box of ammo, nor the necktie.
However, with the same gold piece in 1980 you’d likely get the same deal as a 100 years before, except with a Colt 1911 .45ACP.