Whole communities suddenly fix their minds upon one object, and go mad in its pursuit. Millions of people become simultaneously impressed with one delusion… Money has often been a cause of the delusions of multitudes…
Popular delusions began so early, spread so widely, and have lasted so long, that instead of two or three volumes, fifty would scarcely suffice to detail their history.
Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, 1869.
The pages that follow tell of the greatest cycle of speculative boom and collapse in modern times. There is merit in keeping alive the memory of those days. (What will) prevent these recurrent outbreaks and their aftermath… is the recollection of how, on some past occasion, illusion replaced reality and people got rimmed.
The Great Crash 1929, by John Kenneth Galbraith, 1954.
Success breeds a disregard of the possibility of failure... A fundamental characteristic of our economy is that the financial system swings between robustness and fragility.
Hyman Minsky, 1974.
Biologists know that studying disease helps to understand the healthy body. Physicists collide high energy particles to understand ordinary matter. Meteorologists study hurricanes to forecast local weather. And economists? They are a curiously incurious lot… Financial economics, as a discipline, is where chemistry was in the 16th century; a messy compendium of proven know-how, misty folk wisdom, unexamined assumptions and grandiose speculation.
The Mis-Behaviour of Markets, Benoit Mandelbrot, 2004.
We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping. I admit to not understanding it.
Dr Richard Thaler, behavioural economist, Nobel Prize winner 2017
FURTHER READING