When most people think about financial

bubbles, three great archetypes spring

to mind. The Dutch tulip mania of the

1630s, the South Sea bubble of 1720, and

the dotcom bubble of the late 1990s.

These episodes have become cultural

shorthand for speculative excess,

irrational markets, and the dangers of

chasing easy wealth. Tulip bulb selling

for price of a house, South Sea shares

doubling in days, or internet startups

with no profits reaching billion-dollar

valuations. These are the cautionary

tales that textbooks, documentaries, and

even dinner party conversations return

to again and again. But by focusing only

on these greatest hits, we miss a much

deeper, richer, and more troubling

truth. Bubbles are not rare outliers,

but recurring pattern in economic

history. They happen across centuries in

wildly different industries and even in

societies that thought themselves

immune. Why? Because financial bubbles

are less about the asset being traded,

be it flowers, land, or software, and

more about human psychology, collective

belief, and a seductive story that this

time is different. As we explore these

forgotten bubbles, from France's paper

money experiment under John Law to

Britain's canal and railway frenzies to

speculative land rushes in Melbourne and

Miami to blue chipped illusions and

Japanese skyscrapers, we will see that

the lessons are timeless. Each bubble

reveals the interplay between

innovation, policy, and psychology. And

each collapse exposes a fragile

foundation of collective belief. In the

end, the true subject of bubbles is not

money, but mass psychology. Let's now

take a look at the largely forgotten

bubbles. And then in this video, examine

the root causes and psychological

mechanisms that led to their formation.

At the dawn of the 18th century, France

was financially exhausted. Decades of

war under Louis the 14th had drained the

royal treasury. Into this crisis stepped

a charismatic Scotsman, John Law,

gambler, mathematician, economist, and

visionary. Law convinced the French

regent that paper money, backed not by

gold or silver, but by the productive

capacity of the French economy, could

revive national finances. He created the

Bon Generalall, later nationalized as a

bank Royale, which issued paper bank

notes exchangeable for coin. At the same

time, he launched a Mississippi company,

a trading venture promising immense

riches from France's North American

colonies. Investors could buy shares in

the company with the very paper money

laws bank produced. At first, the system

seemed revolutionary. It expanded

credit, increase liquidity, and fueled a

speculative boom. Parisian elites

crowded the ruin pokes where Mississippi

shares changed hands feverishly. Law was

hailed as a genius and the market

capitalization of his company rivaled

the entire French economy. But the

bubble contained its own seeds of

destruction. The supposed wealth of

Louisiana was largely imaginary. Paper

money multiplied far beyond its metallic

backing, eroding confidence. When

skeptical investors demanded coins or

banknotes, the bonk royale could not

deliver. Panic set in. The share price

collapsed in the French public loss

faith, not just in law, but in paper

money itself. The Mississippi bubble

demonstrates how state-backed monetary

experiments can ignite speculative

euphoria and how quickly credibility can

collapse. Its parallels to modern

cryptocurrency booms are striking. New

financial technologies, charismatic

promoters, early fortunes made, mass

participation, and then a sudden

collapse when faith falters. Monetary

innovation, as John Law learned, always

depends on psychology as much as policy.

Fast forward to the late 18th century

when Britain was undergoing the first

industrial revolution. Canals were the

arteries of progress, promising to

connect mines, factories, and ports with

unprecedented efficiency. The Duke of

Bridgewwater's pioneering canal to

Manchester had shown the enormous

profits and cost savings possible.

Investors and engineers rushed to

replicate the success. By the 1790s,

Parliament authorized nearly 100 canal

projects financed by subscription

shares. Ordinary Britain, shopkeepers,

farmers, tradesmen poured savings into

canal companies, convinced that

waterways were the future. Yet, not

every canal had Bridgewwater's economic

logic. Many were redundant, poorly

planned, or over financed. Competition

between rival routes eroded

profitability. Cost ballooned, revenues

lagged, and investors who bought shares

on the promise of endless growth face

bitter losses. Canal mania reveals the

dangers of infrastructure hype. Just as

21st century investors have rushed into

high-spe speed rail, smart cities or

even hyperloop projects. The canal boom

shows how enthusiasm for transformative

infrastructure can outpace economic

fundamentals. It also demonstrates a

contagion effect. Once one canal

succeeded, investors assumed all canals

would succeed. a cognitive bias known as

extrapolation. If canals were exciting,

railways were intoxicating. By the

1840s, Britain's railway network was

expanding rapidly, and the

transformative power of steam locomotion

was obvious. Faster than canals cheaper

than roads, railways promised not just

profits, but a reshaping of time and

space itself. Shares and railway

companies became the speculative asset

of choice. Ordinary families mortgage

homes to buy them. Newspapers dedicated

entire sections to railway prospects.

Public meetings resembled religious

revivals with promoters preaching the

gospel of iron rails. The frenzy

produced countless paper railways.

Companies that existed only on paper

with no track ever laid. Investors

nevertheless subscribed

enthusiastically. Swept along by fear of

missing out. Politicians and regulators

unwilling to dampen the boom approved

projects without due scrutiny. When

reality failed to match expectations,

collapse was brutal. By 1849, the stock

prices of many railway companies had

fallen by 2/3. Families were ruined and

the economic shock was severe. Railway

mania shows how speculation thrives when

innovation intersects with public

imagination. It also highlights the role

of information cascades, where

individuals base decisions not on their

own judgment, but on the observed

behavior of others. This her behavior

amplified by newspapers and public

spectacle remains central to every

bubble. In the late 19th century,

Melbourne was called Marvelous

Melbourne. Fueled by gold discoveries

and British capital inflows, the city

expanded rapidly. Land value soared and

banks eagerly extended credit for

property speculation. Suburban plots

were sold and resold at ever higher

prices. often without any development.

Banks flushed with deposits from Britain

lent recklessly to property companies.

By the late 1880s, Melbourne had one of

the most inflated property markets in

history. The inevitable crash came in

the early 1890s. Banks failed, foreign

investors fled, and unemployment

skyrocketed. The boom had been built not

on productive development, but on

speculative turnover of titles. The

Australian land boom illustrates the

dangers of global capital flows into

emerging markets, a pattern repeated in

Asia in the 1990s and even in

cryptocurrency markets today. It also

shows the fragility of banking systems

when exposed to real estate cycles. By

the 1920s, Florida became America's

playground. Railroads open access,

advertising promised sunshine and

riches, and celebrities like Al Capone

and the Harvey Firestone family bought

estates. Developers sold swampy land

site unseen to northerners, often

through glossy brochures. Speculation

ran wild. Lots were flipped multiple

times before being built upon. Prices

detached completely from reality. Then

in 1926, hurricanes devastated Miami and

surrounding regions. Transportation

bottlenecks, fraud, and overbuilding

were exposed. The market collapsed,

leaving ghost subdivisions across the

state. The Florida land boom shows the

interplay between media hype, celebrity

culture, and speculative frenzy. It

foreshadowed later real estate bubbles

from Las Vegas in 2008 to crypto

metverse land in 2021. It also

highlights a role of exogenous shocks,

natural disasters, policy changes that

can prick inflated markets. Unlike

speculative canals or swampland, the

Nifty50 were real companies. IBM, Xerox,

Coca-Cola, Polaroid. In the 1960s, these

blue chip stocks were seen as one

decision investments. Buy and never

sell. They were believed to possess

permanent growth, immune to business

cycles. Investors bid up their

valuations to extraordinary levels with

price to earnings ratios exceeding 50.

For a time, the illusion seemed

justified. But by the mid1 1970s,

inflation, oil shocks, and slower growth

shattered a myth. Prices collapsed,

wiping out vast wealth. The Nifty50

illustrates how even rational,

profitable companies can become

speculative assets when narratives of

invincibility take hold. The parallels

of today's Magnificent 7 tech stocks are

clear. Concentration, valuation excess,

and a belief that technology guarantees

perpetual growth. Sometimes all it takes

is one discovery. In 1969, Poseidon and

Lel, a small mining company, announced a

promising nickel find. Nickel prices

were soaring due to demand from

stainless steel production. Investors

piled in and Poseidon share price

rocketed from under $1 to over 280.

Speculation spread to other mining

companies, many with no real prospects.

Small investors eager not to miss out

bought in late, but Poseidon's was less

rich than hoped. Nickel prices fell and

entire sector collapsed by 1970. The

Poseidon bubble shows the dynamics of

resource booms. Real discoveries can

trigger speculative exaggeration. It

also demonstrates the greater fool

theory where late comers buy not for

value but in the hope of selling to

someone even more optimistic. In the

1980s, Japan was at the peak of its

economic miracle. Growth was rapid.

Technology exports dominated and

optimism abounded. Loose monetary policy

fueled credit expansion and both stocks

and real estate prices surged. At its

peak, the land under Tokyo's Imperial

Palace was said to be worth more than

all the real estate in the United

States. The NIK stock index tripled

between 1985 and 1989. But when the Bank

of Japan tightened policy, the bubble

collapsed. By the early 1990s, trillions

in wealth had evaporated. The aftermath

was devastating. Japan entered a lost

decade with deflation, stagnant growth,

and a deeply scarred national psyche.

The bubble showed how central banks can

fuel and burst speculative manias and

how the cultural optimism of an economic

miracle can blind a nation to valuation

extremes. But how do financial bubbles

exactly take shape? Which forces drive

them forward? And how does human

psychology amplify their rise and

collapse? Let's dive deep into this

phenomenon to uncover mechanics behind

the mania. From the moment human beings

began to trade, they discovered not only

the thrill of profit, but also the peril

of collective delusion. The history of

financial bubbles is not merely an

economic history. It is a history of

human psychology written on the grand

stage of markets. Again and again,

society is a move from optimism to

euphoria, from panic to despair. And

every stage reveals something profound

about how people think, feel, and act

when money and dreams collide. But why

do these bubbles look so similar across

centuries? Whether in the tulip fields

of 17th century Holland, the dot offices

of Silicon Valley in the 1990s, or the

cryptocurrency exchanges of the 2020s.

To answer this, we need to dig into the

mass psychology that fuels bubbles and

the cognitive traps that ens snare even

the brightest minds. The emotional cycle

of a bubble is astonishingly

predictable. It usually begins with

optimism. a new opportunity arises.

Perhaps the discovery of gold in the

rivers of California in 1849, or the

launch of railways across Britain in the

1840s, or the emergence of blockchain

technology in the 2010s. At this stage,

investors genuinely believe they are

funding progress. As early adopters see

their fortunes multiply, optimism gives

way to enthusiasm and then euphoria.

Prices rise not because of fundamental

value but because more and more people

are convinced they will rise further. At

the euphoric peak, rational analysis is

drowned out by a chorus of this time is

different. A phrase immortalized by

economist Charles Kindleberger in his

1978 classic Mania panics and crashes.

When doubts finally creep in, perhaps

because of a fail harvest, a change in

regulation, or simply because prices can

climb no higher, the tone shifts

anxiety. Panic spreads quickly, often

triggered by a few high-profile

failures. Suddenly, everyone wants to

sell, but there are no buyers left. What

follows is despair. When prices

collapse, fortunes evaporate, and

participants swear they will never be so

foolish again. Yet, within a generation,

the cycle begins a new. What makes this

pattern so enduring are the cognitive

biases that shape human decision-making.

Behavioral finance pioneered by scholars

like Daniel Conaman and Amos Tverki in

the 1970s has revealed that investors

are not the co-rational calculators

described in classical economics but

deeply emotional beings subject to

systematic errors. Her behavior is

perhaps the most obvious. When we see

others making money, we assume they know

something we do not and we follow along.

This instinct made sense for our

ancestors on Savannah. If everyone runs,

you run too. But in markets, it creates

runaway feedback loops. Confirmation

bias further accelerates the bubble.

Once people are convinced of an asset's

promise, they selectively absorb

information that supports their belief

and dismiss evidence to the contrary.

Overconfidence bias adds another twist

as investors systematically overestimate

their ability to time the market or to

spot the moment when it is time to exit.

In 1720, even Sir Isaac Newton, one of

the greatest mathematical geniuses in

history, lost much of his fortune in the

South Sea bubble, reportedly lamenting

that he could calculate the motions of

heavenly bodies, but not the madness of

men. Narratives and stories play a

central role in overriding rational

analysis. Economic historian Robert

Schiller, who won the Nobel Prize in

2013, coined the term narrative

economics to describe how contagious

stories spread like epidemics, shaping

investment decisions. During the dotcom

bubble, the prevailing narrative was

that the internet would reinvent every

aspect of life, making profits almost

irrelevant. During the housing bubble of

the early 2000s, the story was that real

estate values always rise. In the 1630s,

tulips were said to be not just flowers,

but symbols of status and eternal value.

Media hype magnifies these stories. When

newspapers, television, and later social

media platforms constantly amplify tales

of overnight millionaires, individuals

feel what psychologists call social

proof. If everyone else believes it, it

must be true. Rational calculations

about earnings, dividends, or realistic

yields are drowned in a sea of memes,

headlines, and anecdotes. New

technologies and paradigm shifts are

especially fertile ground for bubbles.

Why? Because they combine genuine

innovation with boundless uncertainty.

Railways in the 19th century, radio in

the 1920s, semiconductors in the 1960s,

and cryptocurrencies in the 2010s all

inspired visions of a transformed

future. Joseph Chumpeder, the Austrian

economist famous for the concept of

creative destruction, argue that

capitalism advances in great waves of

innovation. But when these innovations

appear, no one can say with certainty

which companies will succeed or how

profits will be distributed. This

ambiguity allows speculative narratives

to flourish as investors project their

hopes onto any firm associated with a

new technology. Thus, paradigm shifts

create what Minsky later called

displacement, a spark that ignites

speculative manas. The role of FOMO, the

fear of missing out, cannot be

overstated. In modern slang, it is easy

to dismiss, but the psychological

mechanism is profound. When people see

others enriching themselves, the pain of

missing out feels greater than the risk

of loss. The greater fool theory

emerges. The belief that even if an

asset is overpriced, one can still sell

to someone else at a higher price. This

logic is self-reinforcing. The more

people believe they can find a greater

fool, the more they are willing to

become fools themselves. That is why

bubbles often escalate far beyond what

any sober analysis would predict. One of

the most haunting aspects of bubbles is

that smart, experienced, and even

cynical people participate. Why would

sophisticated investors, hedge fund

managers, and Nobel laureates throw

money at assets they know are

overvalued? The answer lies in

institutional incentives and social

pressure. Fund managers are often

evaluated quarterly. If they refuse to

join a rising market, they risk

underperforming their peers and losing

clients. John Maynor Kanes once quipped

that markets can remain irrational

longer than you can remain solvent. To

sit out a bubble is to risk career

suicide. So even the cautious join in.

On a personal level, cognitive

dissonance also plays a role. If

everyone around you is getting rich, it

is difficult to accept being the lone

skeptic. The combination of professional

incentives and personal psychology

ensures that bubbles sweep up the best

and the brightest. Can bubbles be

recognized in real time or only in

hindsight. Economists debate this

fiercely. Alan Greenspan, then chairman

of the Federal Reserve, famously warned

of irrational exuberance in 1996, years

before the dotcom bubble actually burst.

Yet markets kept climbing. Identifying a

bubble is easier in retrospect, but

there are warning signs. Prices that

rise far beyond historical averages,

valuations disconnected from earnings,

widespread use of leverage, and the

proliferation of speculative instruments

are all red flags. Minsk's financial

instability hypothesis describes how

stability itself breeds instability.

Long periods of calm encourage

risk-taking, which leads to fragile

structures that eventually collapse.

Still, these warnings are often drowned

out during the euphoric stage when

critics are mocked as pessimists or

dinosaurs. History offers sobering

lessons about the timeless cycle of

greed and fear. In every era, whether

few Japan's rice markets, medieval

Venice's spice trades, or Wall Street's

mortgage back securities, the emotional

DNA remains the same. Greed inflates the

bubble. Fear pops it, and despair clears

the ground for the next cycle.

Kindleberger and Minsky both emphasize

that bubbles are not aberrations, but

recurring features of financial history.

They reveal not a flaw in markets alone,

but in human nature itself. This leads

us to the most important question. Can

bubbles ever be avoided or are they

inevitable in capitalism? Optimists

argue that better regulation, improve

financial literacy, and advanced

modeling can mitigate bubbles. Central

banks now monitor systemic risks more

carefully than in previous centuries,

and stress tests aim to prevent

collapses. Yet, skeptics insist that

bubbles are as inevitable as tides. As

long as human beings dream of wealth,

compete with peers, and fall prey to

cognitive biases, speculative manas will

return. Schiller has suggested that the

best offense is not prevention, but

resilience, building systems that can

absorb the shock when bubbles burst. In

the end, the mass psychology of bubbles

tells us a paradoxical story. On the one

hand, bubbles are destructive, wiping

out fortunes and destabilizing

economies. On the other hand, they often

leave behind lasting infrastructure and

progress. The railway mania left Britain

with a dense rail network. The dotcom

bubble left behind fiber optic cables

that powered the internet age. Even the

cryptocurrency boom may leave us with

valuable blockchain technologies. In

this sense, bubbles are the irrational

accelerators of human progress born from

the very same greed and fear that make

us vulnerable. So when we ask why

bubbles follow such predictable

emotional stages, why they are fueled by

her behavior and confirmation bias, why

stories and hype override rationality,

and why even the smartest cannot resist,

we are ultimately asking a deeper

question. What does it mean to be human

in the face of uncertainty and

opportunity? The answer is sobering and

exhilarating at once. We are creatures

of hope and fear, endlessly repeating

cycles of folly and innovation.

Condemned and blessed the waves of

mania, panics, and crashes. And perhaps,

just perhaps, it is this very cycle that

propels history forward. The true lesson

of forgotten bubbles is not simply that

markets are fragile, but that human

psychology is predictable. Each

generation believes itself wiser, more

rational, and better informed. Yet, time

and again, the cycle repeats. As Charles

Kindleberger wrote in his classic mania,

panics, and crashes, there is nothing as

disturbing to one's well-being and

judgment as to see a friend get rich.

From John Law's Paris to Tokyo

skyscrapers, the story is the same.

Financial bubbles are less about assets

than about us. They are mirrors

reflecting our hopes, fears, and

illusions. And until human psychology

changes, the bubbles will keep

returning.