praxeologist on Nostr: Pt3- The Bubble Grows As the Mississippi Company shares soared, Law’s experiment ...
Pt3- The Bubble Grows
As the Mississippi Company shares soared, Law’s experiment seemed to work. Paris was gripped by a speculative mania, with people from all walks of life clamoring to invest. The economy boomed on paper, and Law became one of the most powerful men in Europe.
But beneath the surface, cracks began to appear. The promised wealth of Louisiana proved illusory—its resources vastly exaggerated. To sustain the illusion, Law and his associates painted Louisiana as a land of riches and opportunity, even resorting to sending prisoners, beggars, and vagabonds to the colony to act as settlers. These “fake citizens” were expected to build the thriving economy investors believed in, but many died from harsh conditions, disease, or starvation. The grim reality of the colony further undermined confidence in the Mississippi Company.
Meanwhile, the issuance of massive amounts of paper money inflated prices and eroded trust in the financial system. Investors, growing wary, began demanding gold for their shares and notes. Law, desperate to stabilize the situation, imposed restrictions on currency conversion, but this only fueled panic. The carefully constructed house of cards came crashing down.
Pt4- The Collapse
By 1720, the bubble burst. Confidence in both the Mississippi Company and Law’s paper currency evaporated. Frenzied investors sought to liquidate their holdings, sending share prices into freefall. The French economy spiraled into chaos, and Law, once hailed as a financial savior, became a scapegoat. Stripped of his power, he fled France in disgrace, dying penniless years later.
Source: The Ascent of Money: A Financial History of the World
#grownostr #fiathistory #bitcoin #economics
As the Mississippi Company shares soared, Law’s experiment seemed to work. Paris was gripped by a speculative mania, with people from all walks of life clamoring to invest. The economy boomed on paper, and Law became one of the most powerful men in Europe.
But beneath the surface, cracks began to appear. The promised wealth of Louisiana proved illusory—its resources vastly exaggerated. To sustain the illusion, Law and his associates painted Louisiana as a land of riches and opportunity, even resorting to sending prisoners, beggars, and vagabonds to the colony to act as settlers. These “fake citizens” were expected to build the thriving economy investors believed in, but many died from harsh conditions, disease, or starvation. The grim reality of the colony further undermined confidence in the Mississippi Company.
Meanwhile, the issuance of massive amounts of paper money inflated prices and eroded trust in the financial system. Investors, growing wary, began demanding gold for their shares and notes. Law, desperate to stabilize the situation, imposed restrictions on currency conversion, but this only fueled panic. The carefully constructed house of cards came crashing down.
Pt4- The Collapse
By 1720, the bubble burst. Confidence in both the Mississippi Company and Law’s paper currency evaporated. Frenzied investors sought to liquidate their holdings, sending share prices into freefall. The French economy spiraled into chaos, and Law, once hailed as a financial savior, became a scapegoat. Stripped of his power, he fled France in disgrace, dying penniless years later.
Source: The Ascent of Money: A Financial History of the World
#grownostr #fiathistory #bitcoin #economics