Extraordinary Popular Delusions and the Madness of Crowds

As the number of mindless threads about monetary "crisis" in the Linden to Dollar ratio, and various amateur "solutions" to it crowd out of this forum useful discussions, it might be helpful to refer thoughtful folks to the classic piece on the subject. If for no other reason, it will give them something to read while they wait for the clouds to clear when the Linden turns:

Charles MacKay, Extraordinary Popular Delusions And The Madness Of Crowds (1841).
Because it is long out of copyright and in the public domain and a key seminal work, the full text is online HERE. This is a serious work, in two volumes, so will probably not interest those who already regard themselves as "the world's greatest" whatever and therefor have nothing to learn and everything to tell.

As MacKay says in the opening paragraphs: "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

It certainly reinforces the caution that panic breeds panic and profits speculators. Whenever anyone is trumpeting a "crisis," it is likely that they have a financial interest in the crisis getting worse. Think about that before encouraging them by answering their posts instead of letting them twist slowly, slowly in the wind, ignored.

For quicker reading turn your browser here http://sleconomyblog.blogspot.com/ where I digest and simplify the latest economic news items so they are easier to read.

Above all, remember to keep your cool in this crisis and not to panic.

This is a great read. I continue to insist that there is no crisis, and that the best solution is to implement no solution at all. The L$ should be allowed to continue to decline until price aligns with value. There is nothing wrong with letting residents trade L$ at a stable price in the neighborhood of the price that LL sells L$ for themselves.

There is no shame in LL admitting that a dollar should be worth L$316 on LindeX rather than L$250! It's the price that they set themselves! Free your minds of the great illusion that a dollar is worth L$250!

There is a big difference between taking action, because action is warranted, and taking action because of crisis.

Available statistics indicate no obvious crisis at this time.

These same available statistics however, warrant that action be taken.

Simply that and nothing more.

I love that book; have it in hardcover. (Only one volume in my edition though.)

Comparing modern technology's L$ and tulip collecting or shares of bubble schemes doesn't work too well. The story of Law and how he almost wiped out France, however, may be more of a cousin to this.

Yeah.

Fabulous book that they should force kids to read at school!

(clearly Jamie is not going to read it.)

Jamie, please. Put it in your sig. We get it already.

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Fact is, FUD sells. Another excellent study is how the spyware business goes about making its money. While many do it through "click fraud" and installs, some of the more nefarious apps have taken a more subtle approach.


Observe (just skim the pictures) -
http://sunbeltblog.blogspot.com/2006/02/um-i-dont-think-so.html

As you can see here, the spyware preys on the fear of its "customers" by incenting them to buy a "cleaning product," which in turn backdoors further problems along with it's salable "solution." And the vicious cycle continues. It's absolutely brilliant in its conception, albeit evil.

Lots of similar analogies can be drawn. Point being, FUD is fun for inciting people with weaker intellect. But for the more savvy user, it's white noise.

So vote with your time and let that sort of thread die.

Wow, you're really pushing that blog, aren't ya? That's why I refuse to click it, it's been in just about every thread!

That does it. The time is now!

I'm making a limited-edition Tulip line.

Sorry, but I read your blog. The only "economic news" you report is that the $L has dropped in value when compared to the dollar. A digest would imply the collection of more than 1 news item, if, for example Readers Digest only had a single article it wouldn't really be a digest would it? The rest of your deliberately panic inducing screed was pure hysteria. Why do you want to trigger a run on the $L? Why is it that the people who think they're such great capitalists look down on the people doing the real work and try to get rich manipulating the system? Stop trying to game the system Jamie, get an SL job selling stuff you actually created if you want to be a big business girl. But the constant bulls**t about the sky falling is getting old fast.

You really should take a look at it. It's freaking hilarious in its ineptitude and self aggrandizing.

I've been busy, but this older post (and the previous one linked from it) still has merit I think:

http://sungak.net/weblog/archives/33

Is it Prokish?

No. No. No. Prok's is a chore to read. Jamie's is like a little bite size, flavorful snack of unintentional self-parody.

This thread is the best thing I have read in this board for ages for so many reasons...

I laughed. I cried. I sniggered and learnt something. Top tip on the book thanks.

Bit like Caldwell's Blink etc but from a day where people had time to think about things instead of consume them.

Also, Prok often has some fairly interesting, and sometimes even good ideas; the problems lie in using five hundred words where fifty or five might do, and in essentially dismissing everyone not-Prok and not-agreeing as "tekkie".

She's too "foamy at the mouth" and obessed with FIC and Aimee to really take seriously. If she could calm down and not foam about anything and everything, SOME of the ideas are fine. Oh, and lose the world is out to get her attitude.


Jamie,
Go back to the early days of January when you were the Queen of Crunk.

Unless the diversion to comments on personal style are meant to illustrate how a crowd gets distracted from their original thought?

I thought Jamie was a guy. >_<

Boom and bust cycles have always driven the US economy, leads a short article in February's issue of Wired magazine. Daniel Gross, who writes the Moneybox column for Slate and contributes economic views to the New York Times, reminds readers of the "methodless enthusiam" in which telegraph companies (in the 1850's) and railroad companies (in the 1870's) were the "boom" industries of their time.

Although the enthusiam of investors to be in on the expanding economic opportunities of these revolutionary industries eventually led to a huge bust and bankruptcies, they got the U.S. wired for telegraph and rigged for railroad travel. That was a tremendous benefit to the general economy, even though most early investors lost their shirts.

Likewise, the "dot dash" boom and bust of the end of the 20th century. Although billions were lost in the "irrational exuberance," those who built the infrastructure for today's Internet repeated the experiences of the telegraph and railroad industries. The result, according to Dan Gross, is a delayed boom of companies making use of the widespread, affordable broadband access throughout the US and the technology developed to use it.

Dan's article, In Praise of Bubbles is online now and in the February issue of Wired magazine on newstands.

Is Dan right, has the dot-dash boom repeated that of telegraph and railroad building? Is the nation better off as a result, despite the madness of crowds that was involved?

I can't believe nobody else has realized that Jamie is an intentional parody.

Coming soon -- the next iteration of this pattern --

LL seems interested in becoming a software licensing company, offloading the chores of actually hosting sims on server farms to private operators. Imagine your favorite island baron running his subcontinent from his own servers, using software licensed from LL. Imagine his rival trying to build up a BIGGER subcontinent. These would-be world creators will all be focussed on you. : )

They'll need a big starter population more than anything else. After all, who wants to join an empty world? Those residents who are willing to be 'green dots on the map' and active participants (there's a difference!) within the starter population of a private grid world will get deep discounts. Kinda like a new mall offers deep discounts to those who are willing to rent the first shops.

Competing with each other to grow population, the early entrepreneurs will run at a loss, and the inevitable shakeout will leave many sadder but wiser. If the pattern plays out in all its stages we can expect that period of wild, financially unsupportable expansion to result in a proven infrastructure for parallel privately run SL grids.

Perhaps Jamie is doing that now, but given her history, I don't find the joke funny.

No commentary from the Star Chamber please.

There isn't much to that blog, just some rants.... Not missing a thing.