alt Hacker NewsI teach the LSAT and one of the passages is famously about this mania and contends that it was actually rational. You paid a high price for a tulip bulb, planted it, and then sold the descendants which paid off the original price.
The narrative from this article seems to be largely based on Thackeray's book from 1841. Wikipedia suggests the LSAT passage is modern scholarly received wisdom at least in some quarters, but does anyone have better knowledge of the state of our understanding of the history of tulip prices?
Edit: the top comment provided what I had been thinking of. My account above about profits wasn't right, because the trades were never fulfilled. When prices went too high, people didn't honour their contracts and that was that. No one went bankrupt. And as the bulb owners had bought at lower prices they also were fine.
https://news.ycombinator.com/item?id=48322546
https://www.smithsonianmag.com/history/there-never-was-real-...
Replies
According to Copilot you can get one or two offspring per year from a tulip. So if you spent the price of a really nice house on one of those, it will take you quite some time to multiply the price down into reasonable territory. And even if you stay in unreasonable price territory, an average home, it is one thing to find a buyer for one tulip at that price, it is a very different thing to find a bunch of them. And you are still looking at three, four, five years of tulip growing to get the price down to a tenth of what you paid.
By that definition every pyramid scheme is rational (of course only until you run out of greater fools).
Are you asking because you think the LSAT is at odds with the article's description of the mania? Because it is not.
There are so many of these breeding ponzi schemes every few years. Guinea pigs, "rare" snakes, long distance pigeons, you name it. They are all ponzis regardless of the animal reproducing, with the added benefit that instead of just being part of a financial scam you can also be part of animal abuse, because most people don't give two shits about the animal, mess it up, abandon them later, etc.
That logic has a glaring flaw, that while tulips might be in short supply, the price is driven by everyone else doing that too, so there'll be a glut of new blubs in the future, so the future price shouldn't be assumed to be the current price.
Anything self-replicating can't hold to "current price best predicts future price".