I trained as a financial historian. My academic work focused on banks and financial markets in the past, and I was always fascinated by iconic bubbles of financial history[1] — the tulip mania, the financial boom of the 1690s, the South Sea Company and Britain’s many financial panics in the 19th century[2].
I wrote a thesis on the 1847 commercial crisis. I analyzed financial returns on London’s stock market in the Victorian and Edwardian eras, and showed that returns then squared well with the first round of factor analyses developed a century later. I investigated the Bank of England's role in the 1857 crisis, the 1866 Overend, Gurney & Company collapse[3] and the 1890 bailout[4] of Baring Brothers. (If you are under the impression that financial crises, government mismanagement and central bank[5] bailouts only happened in the post-1971 era of modern monetary debasement, you are sorely mistaken).
You could, Ray Dalio-style, say that nothing is new under our financial sun: many of these past crises map well onto more modern ones[6] — perhaps, because there are only so many ways[7] to make losses or catastrophically ruin monetary arrangements.
While the concept of “bubbles” runs freely across the chronicles of financial history and those who study it, I was less convinced. The hand-waving arrogance with which well-established financial historians would denounce something as a bubble, delusion or financial madness would be familiar to most bitcoiners reading The New York Times or The Economist today. Mostly, these otherwise astute academics meant to launch derogatory remarks on the sorts of people who handled assets, and implied that real-world plebs in trading pits or exchanges couldn’t
