Mania And Madness: A History Of Things People Liked Too Much

Did you know that mania is considered a mental illness? Google Dictionary defines it as a “mental illness marked by periods of great excitement, euphoria, delusions and overactivity.” Among its synonyms are “madness,” “insanity” and “lunacy.”

We’ll let you decide how you come down on that as an appropriate description of the cryptomania that has seized not just the payments community, but the public at large. Regardless of whether one feels it’s “lunacy” to invest in cryptos, everyone can agree that this trend has generated “great excitement,” “euphoria” and “overactivity.”

And possibly also “delusions.”

At the very least, it’s safe to say that many speculators have visions of wealth and grandeur, as some even go so far as to pour their savings into bitcoin, Ethereum and other cryptocurrencies — while at the same time understanding very little about how these currencies actually work, where their value is stored or, indeed, whether they have any value at all.

Many crypto skeptics have already prophesied the bursting of the bitcoin bubble, so there’s no need to rehash that subject. Instead, here are a few examples of other times in history that people got really, really excited about things they didn’t understand, and how that worked out for them in the end.

Tulips

Mania isn’t a 21st-century phenomenon. Back in 1634, just a few decades after Turkey introduced Holland to the tulip, the Dutch were going crazy for this bright, novel type of flower. Its popularity sent prices soaring.

After a non-fatal virus called “mosaic” infected the tulip population, causing “flames” of color to appear on the petals, prices spiked even higher, as people clamored to buy the most desirable variations.

Essentially, says Investopedia, people were speculating on the tulip market. It was a bubble that appeared at the time to have no limits. Just like with bitcoin, people were liquidating any assets they could spare — and some they couldn’t — to get their hands on more bulbs. Individuals were selling off land and life savings, believing they could resell the bulbs to naïve tourists for an even higher premium.

The price of tulips increased 20-fold in a single month. That’s when the prudent folks decided to lock in their profits by starting to sell. Everyone else soon followed suit, sending prices into a nosedive and triggering a nationwide economic depression.

The Stock Market

After winning the First World War, Americans were feeling good. It was an era of luxury, as industrialization continued to gain momentum. The stock market was seen as a risk-free investment where nothing ever went anywhere but up.

Every Average Joe believed he would be able to get rich off trading stocks. But, of course, as we understand today, the stock market has winners and losers — and Americans’ bullish enthusiasm would soon make losers of them all when the market crashed in 1929.

Investment bankers, brokers, traders and even owners who actually understood what they were doing in the stock market began taking advantage of the average investor’s cluelessness. They traded stocks between themselves to manipulate prices — then sold off assets after the public cottoned on to the price progression and bought into the stock, which, of course, sent its price through the roof.

Investopedia attributes both the stock market mania and its subsequent crash to a simple bit of human psychology: herd mentality. Hapless investors were easily swept up in popular opinion, which led to the market’s rise. But they were just as easily swept up in widespread panic as the market began to collapse.

Wall Street financiers tried to hold the system together by buying up large chunks of shares, but it was too little, too late. The dam had burst, and the entire world was awash in the Great Depression.

The Beatles

Not every mania involves moving money around — although it’s probably safe to say that Beatles fans spent a pretty penny on concert tickets, merchandise and probably also travel to attend shows, or even just a chance to see the Fab Four on their way into or out of a sold-out venue.

Fans were commonly seen screaming, crying, fainting or being restrained en masse by squads of police officers. They were undeterred by the possibility that police may resort to using fire hoses to hold them back. The potential for arrest did not faze fans who rode a baggage claim conveyer belt into an airport in hopes of glimpsing their idols. Crowds outside venues were so large and enthusiastic that the band essentially became besieged, unable to break through the horde.

What inspired such — dare we call it — “lunacy?” Certainly, young music fans will flock to a band that is talented, handsome and charming, as the Beatles were. And the band’s timing was good: Its members just missed the compulsory National Service program, and the first generation of Baby Boomers had just reached their teens. It was a prosperous time in the West, and the Beatles’ music fit that mood.

More than 50 years later, though, the obsession still cannot fully be explained. Some artists just have that charisma, that je ne sais quoi that drives fans mad. Previously, musicians such as Elvis and 19th-century pianist Franz Liszt enjoyed similar adoration.

Twin Peaks

The peculiar mystery drama television series “Twin Peaks” was an overnight phenomenon that had the entire nation asking in unison, “Who killed Laura Palmer?” It was the “Stranger Things” of its time. Everyone was talking about it.

Unfortunately for the show, its popularity waned just as fast as it exploded. Fans lost patience after the first season failed to answer the critical question of whodunit (try telling those folks that “How I Met Your Mother” was in its ninth season before finally revealing the mother’s identity).

It was all over in 14 months. The show lasted just two seasons. Yet even today, it enjoys traces of the mania that marked its 1990s debut — as evidenced by the revival series on Showtime.

Real Estate

U.S. housing prices started their steep climb in 1999, eventually moving out of alignment with factors like household income. The Federal Reserve Board slashed interest rates after the 2000-2001 recession and the terrorist attacks of Sept. 11, 2001, to encourage prospective homebuyers to borrow money.

Banks discovered they could reduce risk by bundling mortgage loans and selling them off to investors, who could make money off interest payments from the borrowers.

At the same time, global investors had noticed the rise of U.S. real estate and viewed it as a safe investment. They made the same mistake as 1920s stock market investors, believing they couldn’t lose.

For a while, everybody was rich and happy. There was so much money to be made that banks were lending to prospective buyers with subprime credit.

As long as everyone could pay their mortgage, everything would be fine. But when people lost jobs, interest rates went up and housing prices went down, it was a perfect storm that led the housing bubble to burst in 2007, sparking another global economic recession soon after.

Conclusion

As the great prophet Yogi Berra once said, a nickel ain’t worth a dime anymore. He also said, it’s like déjà vu all over again.

Both aphorisms seem rather fitting for where we are right now in the midst of the cryptomania that’s taken hold of not only the trade press, but the mainstream press too. Crypto and its regulatory implications have even made the agenda at the upcoming G20 Summit. Imagine that.

What’s certain is that fads come to an end, and bubbles eventually burst — and the life span of either is anyone’s guess. The one question today that no one can answer is when that will happen. To that question, there is one certainty: For many, it will come to an end far too late for them to recover.

You only know that the bubble has burst when, in fact, it has.