Exchanges, bubbles and central banks · 1600s–1790s
1636–1637
Tulip mania
Contracts for rare tulip bulbs soar in the Dutch Republic, then collapse in February 1637.
Rare tulip bulbs became fashionable, and people traded contracts for bulbs still in the ground, often in taverns. Prices rose steeply through the winter of 1636, then collapsed in February 1637.
Historians still debate how much damage it did, but it became the classic story of a speculative bubble.
💡 Why it made sense then
When prices keep rising, buying to resell looks easy money. It works until there's no one left to buy.
Ideas it gave us
- 🏗️ Market bubble
A market bubble is when prices rise far above any reasonable measure of value because buyers expect to sell to someone else at a higher price, until confidence breaks and prices crash.
Practise with $10,000 in play money
Free. No real money involved.