The "Tulip Madness" phenomenon is a case that often gets thrown around in speculation markets. Let's look into it.

If you've been around long enough, you start to hear the same thing over and over again. Now, I haven't been around that long, but I've heard this tulip story a couple times. It was all the rage when Bitcoin was having its day, and I've heard it mentioned in relation to the recent comic book craze since the Golden Age of Comic Book Movies.

The Legend

For those who aren't familiar, let me recap. The Tulip Craze of the late 17th century in the Netherlands led to an unheard-of market explosion of tulips. Businesses were created in order to deal with the demand, police strolled the fields, and a man was thrown in jail for a felony after eating what he thought was onion bulb. (It was a tulip bulb) Then, the craze for tulips ceased and buyers defaulted on their agreements thus collapsing the market. Tulips became almost worthless once more.

The Reality

Almost none of this happened. Okay, there were certain tulips that became very valuable to a very select class. (They had rare striations and color combinations.) But it wasn't a nationwide catastrophe. No one was bankrupted. No one went to jail. "Economic collapse" is a lie.

Why it Persists

The myth was perpetuated by Dutch Calvinists who warned against the Dutch's sudden prosperity. Success now meant future ruin. Excess equated to social decay. Fortunately, society has been decaying for as long as we've been able to say the words and it's still holding together.

More than just Comic Books

This legend is thrown around to show how flimsy speculation markets are. The argument is that tulips had no inherent value and thus their market price would always reflect that. The hype was a false indicator of their real value. I've seen it mentioned on comic book forums when people are asked to guess about the future. And just like the future as seen by the Dutch Calvinists, the sky is always falling.

Inherent Value

We have to look at the premise of the tulip myth more closely. Tulips have no inherent value. That can be said of anything. One-hundred-dollar bills also have no inherent value. Objects are only imbued with as much value as they are perceived to possess. If the End of the World happened tomorrow, it doesn't matter whether you have a million dollars worth of comic books, gold bricks, or cash in the mattress. Only the person with some sheep and cows and a well would be considered rich.

Long Term

In the long term, will comic books hold their value? Who could ever know? It's just as likely that the kids of today who are watching all these Marvel movies will want to collect and invest in their memories when they hit middle age. It's also possible no one does. (Unlikely, in my opinion.) But unlike tulips, comic books can't be cultivated. There's only a finite number of comic books and with each passing day, there are less and less.

So next time you read or hear about the Tulip Madness and how the future is going to be catastrophic, you can breathe easy. There never really was one.

 

 

 

 

 

 

 

Upgrade to GoCollect Premium Today