Bubbles

The economic history of the modern world has seen it’s fair share of the phenomenon called bubbles.

One of the early, interesting ones is the one orchestrated by John Law. He was a very influential Scottish financier who gained a lot of favor with the pre-revolution Ancien Régime of France.

He was responsible for the Mississippi Company.

This company was ostensibly set up as a typical 18th century government sponsored monopoly. In comparison to its wildly successful Dutch counterpart (which delivered real economic value to it’s shareholders), the Mississippi Company turned out to be a bubble which was propped up by the manic manipulations of Law, who at one time, controlled the currency issuer, the central bank and the largest corporation in the country.

The initial speculations by the shareholders led to the creation of the first “millionaires” in the world. However the company turned out to be a spectacular failure and Law was exposed. He fled the country, leaving it in financial ruin. But the ground was now prepped for the revolution to occur and eventually bring about historic change.

Modern times have also seen fraudulent companies like Enron prop up bubbles by having large influence with the government, but eventually causing economic disasters.