These days, with all the pundits preaching doom and the impending collapse of society into some kind of Mad Max style wasteland, it's easy for us to imagine that the economy is as unhealthy as it's ever been.
But any historian would give you a hard backhanded smack for even saying that out loud. History is full of economic idiocy, and here are five economic collapses that make 2010 feel like the Renaissance.
#5. Tulip Mania
Every Christmas, there's some "hot toy" that has parents standing in line in the wee hours of the morning, getting in fistfights, and paying 10 times retail on eBay--all for something the kid will get bored with a week later. But of course it's not about the kid, it's about the hunt.
The second most dangerous game.
The toy becomes valuable to them only because it is valuable to other people. It's a self-sustaining cycle of irrational stupidity.
But that phenomenon isn't new. In fact, a consumer craze (over flowers, of all things) created the very first recorded economic bubble, almost 400 years ago.
In the 1600s the tulip was still pretty new to the Netherlands, and they quickly became a Beanie Baby-style "must-have" item among people who had too much money to spend.
Tulips! I can't fucking believe it!
Now, as with most plants, tulips have a very specific growing season, so they weren't available to buy year round. But the Dutch wanted assurances right the hell now that they would own a tulip by year's end, so suppliers set up a futures market, which basically meant that in the off-season people could buy tulip IOUs to be exchanged for real tulips when said tulips actually grew.
Fun fact: A "Dutch tulip" is also a very fancy way to roll a joint.
And then people started playing the market and inflating the prices and, well, it was just a matter of time until things got really, really stupid.
What Went Wrong?
At the peak of trading in the early months of 1637, the futures market had gotten so out of hand that even a single tulip bulb had become ridiculously valuable. While no one really agrees just how insane the prices became, it's understood that some bulbs were trading for at least 10 times the annual wage of a skilled craftsman. That's 10 years' salary for one, solitary flower that just goes into the garden and sits there.
Get a job!
Eventually a whole lot of people stopped and said, "What the fuck are we doing?" and the bubble burst, the price of tulips falling back down to sane levels. The downside is that a whole bunch of people had locked themselves into tulip contracts during the height of the craze, and were therefore committed to handing over the family fortune for something that was worth about a buck fifty.
Financial ruin never smelled so sweet.
#4. The Mississippi Bubble
As ridiculous as the tulip thing sounds, at least those were physical objects that existed, and that people weren't throwing their money away on a purely imaginary idea.
Which brings us to France's Mississippi bubble.
In 1715, King Louis XIV of France finally keeled over and died of exhaustion from screwing France's economy for 72 years straight. Louis had also exhausted France's supply of gold via a series of costly wars and the small matter of having built himself a gilded palace that Liberace described as "a bit tacky."
Louis was eccentric to say the least.
By the time he was done, there wasn't enough gold left to sustain the minting of new coins.
A shrewd economist named John Law leapt to the aid of the nation by proposing a new concept he called a "bank", at which people could trade their heavy and primitive gold for colorful and exciting bank notes that were just as valuable, but easier to hide under mattresses and in bras.
What Went Wrong?
Unfortunately, the newly appointed regent of France didn't understand economics worth a damn, specifically the rule that money is supposed to represent things that are, you know, valuable. You can't circulate more money than can actually be exchanged for things of real value. They printed so much money that it represented five times more wealth than France actually had.
It wasn't long before the people became suspicious that they were actually walking around with their pockets full of Monopoly money. John Law knew he had to make a move, so he told everybody about an exciting new investment opportunity: the French colony of Louisiana in the not-yet-United-States.
After all, he said, just think of the piles of gold, precious gems and Mardi Gras beads that were sure to just be littering the Mississippi river. The people could invest their money in the venture, so that not only would the government obtain more concrete wealth, but it could quietly dispose of the ridiculous surplus of paper money and pretend the whole thing never happened.
Of course, it turned out Louisiana was a wretched, inhospitable swamp. Instead of fields of rubies, rivers aflow with diamonds and mountains made of solid gold, all the French found along the Mississippi were alligators, giant rats and a whole lot of gumbo.
It's still pretty much the same, but with more Saints fans.
Unfortunately the people of France had already invested their life savings in Louisiana shares, and were sitting around with big dumb smiles on their faces waiting for the ships to return to port laden with their promised riches.
When word got out that the only gold to be found in Louisiana was inside the mouths of hillbillies, people quickly offloaded their shares for a fraction of the original price, then trampled each other to death to run to the bank to change their paper money back into gold before it ran out and their notes became worthless.
#3. The South Sea Bubble
At around the same time France was getting screwed over, Britain was also feeling the sting of government overspending. They looked at what was happening on the mainland with interest and decided that they would attempt a similar scheme, but haughtily pledged that they were too smart to fall into the same pitfalls that their old enemy had encountered. And they were right. Sadly, they just found different traps to impale their economy on.
Is there anything Mortal Kombat can't illustrate?
It was well known in Europe that, unlike the smelly armpit of North America that was the Louisiana bayou, there really was a shitload of gold to be had further South. There was so much gold there that the Aztecs actually valued feathers more highly. Someone just needed to go over there and trawl through the garbage bins of Tenochtitlan.
Cue the formation of the South Sea Company, which the British government granted exclusive trading rights to the whole of the super rich continent of South America. It came as no surprise that when shares in the company hit the market, they were snatched up in no time by eager speculators.
Rich and poor, everybody opened their wallets until basically the entire GDP of Britain was locked up in the South Sea Company's bank vaults. All they had to do was wait for the gold to come sailing in!
What Went Wrong?
There was of course the small detail that South America was largely owned and controlled by Spain. And when Britain politely asked to send their ships over to retrieve all of that spare garbage-gold, Spain said no.
Or as they say in Spain, "No."
The people of Britain thought for some reason that the King of Spain had recently decided to grant their British BFFs permanent unlimited use of their trading ports, which turned out to be a slight exaggeration. What the King actually said was that the South Sea Company could send over a single ship and then get the hell out. This wasn't secret information, but the masses chose to believe the ridiculous rumor over the documented truth, because it just made so much more sense that Spain would let them have all of the gold they wanted, for free.
M.C. Hammer would utilize similar logic centuries later.
When it eventually became abundantly clear that they had all been cripplingly retarded, shouts of "Buy! Buy!" turned quickly into screams of "Sell this flaming turd now!" and the stock plummeted. Most people couldn't give their shares away now, when just a week past they'd mortgaged their homes and sold all of their possessions just to have a hand in the "can't miss" company. This single venture completely crippled the British economy, and an entire generation nearly went bankrupt.