Historical amnesia contributes to the recurring pattern of financial bubbles from "summary" of A Short History of Financial Euphoria by John Kenneth Galbraith
The forgetting of history is a key element in the recurrence of financial bubbles. Time and again, people are prone to forgetting the lessons of the past and succumb to the same mistakes that have led to financial disasters before. The cycle of boom and bust is a familiar one throughout history, yet each time a new bubble emerges, it seems that people are caught off guard as if it were a completely novel phenomenon. When a financial bubble is in the making, there is a collective amnesia about previous bubbles and their eventual bursts. People become swept up in the euphoria of the moment, believing that "this time is different" and that the laws of financial gravity no longer apply. Rationality gives way to irrational exuberance, and caution is thrown to the wind as greed takes over. The warnings of past bubbles are dismissed as irrelevant, and those who dare...
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Historical amnesia contributes to the recurring pattern of financial bubbles
The forgetting of history is a key element in the recurrence of financial bubbles. Time and again, people are prone to forgetti...