Sunday, March 2, 2014

The Bubble that Broke the World


Read the following text:
"Mass delusions are not rare. They salt the human story. The hallucinatory types are well known; so also is the sudden variation called mania, generally localized, like the tulip mania in Holland many years ago or the common- stock mania of a recent time in Wall Street. But a delusion affecting the mentality of the entire world at one time was hitherto unknown. All our experience with it is original.
This is a delusion about credit. And whereas from the nature of credit it is to be expected that a certain line will divide the view between creditor and debtor, the irrational fact in this case is that for more than ten years debtors and creditors together have pursued the same deceptions. In many ways, as will appear, the folly of the lender has exceeded the extravagance of the borrower."
The above sounds very familiar. It's similar to things that I and many other people have written about the debauched use of credit today.
But this wasn't written today. It appeared in a 1932 book that a web site reader recently alerted me to.
The book is A Bubble that Broke the World, by Garet Garrett. A pointer to the PDF file for the entire book can be found on this web page on It was based on a series of articles by the author appearing in the Saturday Evening Post during 1931.

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