28 September 2008

These delusive seasons

Every now and then the world is visited by one of these delusive seasons, when the credit system .... expands to full luxuriance: everybody trusts everybody; a bad debt is a thing unheard of; the broad way to certain and sudden wealth lies plain and open; and men are tempted to dash forward boldly from the facility of borrowing. Promissory notes, interchanged between scheming individuals, are liberally discounted at the banks..... Every one now talks in [bodacious amounts]; nothing is heard but gigantic operations in trade; great purchases and sales of real property, and immense sums [are] made at every transfer. All, to be sure, as yet exists in promise; but the believer in promises calculates the aggregate as solid capital..... Now is the time for speculative and dreaming or designing men. They relate their dreams and projects to the ignorant and credulous, dazzle them with golden visions, and set them maddening after shadows. The example of one stimulates another; speculation rises on speculation; bubble rises on bubble; every one helps .... to swell the windy superstructure. Speculation is the romance of trade, and casts contempt upon all its sober realities. It renders the [financier] a magician, and the Exchange a region of enchantment..... No operation is thought worthy of attention that does not double or treble the investment. No business is worth following that does not promise an immediate fortune..... The subterranean garden of Aladdin is nothing to the realms of wealth that break upon [the] imagination. Could this delusion always last, .... life .... would indeed be a golden dream; but it is as short as it is brilliant.

~ Washington Irving (1783-1859) in Crayon Papers about the Mississippi Bubble of 1719. As related by Dallas Fed's Richard Fisher.

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