[larryfreeman]

Thanks for the link. Interesting analysis.

Still, I think it proves my point that you can always blame the government if you want to.

In my view, the reasoning has one major flaw. If money supply was the cause, then why weren't there other bubbles in addition to tulipmania?

If you correctly identify the cause, then it should be both sufficient and necessary for the result. If the cause was the Dutch monetary policy, then there should have been other bubbles contemporary with the monetary policy.

As far as I understand it, the tulipmania did not cause a recession or depression even if some very rich people lost all their money. If the author's reasoning was correct, then there should have been other bubbles caused by the same government policy.

[kiba]

Do you mean by this?

But what made this episode unique was that the government policy did not expand the supply of money through fractional reserve banking which is the modern tool. Actually, it was quite the opposite. As kings throughout Europe debased their currencies, through clipping, sweating or by decree, the Dutch provided a sound money policy, which called for money to be backed one hundred per cent by specie. This policy, combined with the occasional seizure of bullion and coin from Spanish ships on the high seas, served to attract coin and bullion from throughout the world.

I do not know of any more of this monetary policy implemented. Perhaps you could illustrate some examples from history.