Ep25 “Bubble Trouble” with Will Goetzmann
All Else Equal: Making Better Decisions
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The Reactions to the 1720 Bubble
In 1720, London saw a massive amount of capital flowing in to creative new entrepreneurial ideas that didn't have anything to do with big trading companies. When the crash came and it was partially spurred by some financial constraints to begin with, Parliament decided in its wisdom that it would not allow stock market trading at all. We went from an economy that had all sorts of potential for industrial development by accessing equity capital to an economy that was very constricted in the way that it could deploy capital to new ideas. So this tendency to clamp down on capital markets after one of these events was harmful.
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