Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
By Charles Mackay
Published in 1841
Thibault’s Score: 3/5
This book is often regarded as one of the oldest finance textbooks, which is why I wanted to read it. It was written by Scottish journalist Charles Mackay.
The book isn’t strictly economics-focused; instead it covers a wide variety of topics where the madness of crowds produced negative outcomes.
It covers everything from economic bubbles, to alchemy, to the crusades. There are many fascinating anecdotes and nuggets of information. Despite this, many chapters were quite boring. Many of the stories, especially about the alchemists, are very entertaining.
Mackey does not attempt to create a set of generalized principles. He almost exclusively relays narrative stories recounting the history of various events. As such, I personally do not agree that it qualifies as a finance textbook.
Here is a list of some of the five most interesting things that I learned:
1: France sold Louisiana to the United States because a failed attempt to create a land-backed currency resulted in hyperinflation.
2: The personalities of many of the alchemists covered in this book is almost identical to the personality of later financial shiesters.
3: The British government attempted to prevent bubbles by vaguely passing legislation banning bubble companies.
4: Fortune tellers repeatedly would make end of the world predictions and cause riots in London during the early modern era.
5: St. Thomas of Aquinas allegedly built an android to do household chores, but scrapped it because it was mean.
I highly recommend the first few chapters that focus on financial bubbles to anyone who is interested in finance or economics. However, the rest of the book can be quite boring and irrelevant.
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