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Thomas Jefferson on “bubbles”

The American mind is now in that state of fever which the world has so often seen in the history of other nations. We are under the bank bubble [of financial speculation], as England was under the South Sea bubble, France under the Mississippi bubble, and as every nation is liable to be, under whatever bubble, design, or delusion may puff up in moments when off their guard.
Thomas Jefferson to Charles Yancey, 1816, 965

Patrick Lee’s Explanation
No shimmering, soapy spheres here. These bubbles describe the unwarranted financial excitement nations get caught up in, usually to their hurt. The bubble affecting America in 1816 was a financial one. Within several years, that bubble would burst, leading to what was called the “Panic of 1819.”
Read about England’s South Sea bubble here, France’s Mississippi bubble here, and America’s Panic of 1819 here.
All three of these “bubbles” share a common thread of monopolistic control over certain portions of the economy.
Like those shimmering, soapy spheres, economic bubbles are entrancing to behold and lack any realistic foundation. Unlike soap bubbles, whose bursting causes no harm, financial bubbles usually take many innocent people down with them.
Being constantly on guard, whether as an individual or a nation, is a strong defense against bubbles.

What other warnings might Thomas Jefferson have for your audience?
Find out! Call Patrick Lee, 573-657-2739

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One Response to Thomas Jefferson on “bubbles”

  1. Richard Cheatham says:

    Jefferson was so perceptive in such matters. Government intrusions (compulsions) into the economy of any and all kinds (even when they are supposedly intended to be protections) have consequences that warp the economy and produce consequences that can not be predicted. These intrusions are always “sold” to the naive with the argument that “we experts” can make things better for you. Those “experts” are always humans who do not know everything, who do make mistakes and who have values and opinions(and personal incentives and dis-incentives) and agendas somewhat different from the values and opinions and agendas of other people. But…most people do not want to take the effort to be skeptical and are fine to to believe in magic and to let government “experts” decide these things for them…until the piper has to be paid. Then when the pain is great enough they always cry…”What happened?” This is the price to pay also for not paying attention to History and living in a self-imposed amnesia. All these bubbles can be and have been predicted by those who understand the free market with free people making voluntary trades and contracts with each other.

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