A Short History of Financial Euphoria (Business)

by John Kenneth Galbraith

The euphoric episode is protected and sustained by the will of those who are involved, in order to justify the circumstances that are making them rich. And it is equally protected by the will to ignore, exorcise, or condemn those who express doubts.

There can be few fields of human endeavor in which history counts for so little as in the world of finance.

Money is the measure of capitalist achievement.

U niformly in all such events there is the thought that there is something new in the world.

In all speculative episodes there is always an element of pride in discovering what is seemingly new and greatly rewarding in the way of financial instrument or investment opportunity.

All financial innovation involves, in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.

All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment.

Speculation, it has been noted, comes when popular imagination settles on something seemingly new in the field of commerce or finance.

Fools, as it has long been said, are indeed separated, soon or eventually, from their money.