A Short History of Financial Euphoria

John Kenneth Galbraith

July 1, 1994

"A Short History of Financial Euphoria" by John Kenneth Galbraith is a classic work of economic research, tracing the history of economic cycles from seventeenth-century Dutch tulip mania to the current day. Galbraith examines the period of "euphoria" -- a self-fulfilling cycle of runaway speculation -- and demonstrates how it has set the stage for financial bubbles and "schemes" in the centuries since. At the same time, he also provides an insightful analysis of the forces of human nature -- irrationality, "get rich quick" mania, and herd behavior -- that underlie euphoria and have led to booms and busts he describes. Throughout the book, Galbraith uses vivid examples of both common and lesser-known episodes of financial exuberance to explain the psychology behind financial speculation and to pinpoint similarities between events of the past and today. He draws from economic history, reporting of international markets, and personal anecdotes to paint a vivid picture of the people, trends, and prices that have yielded temporary riches only to collapse soon after. In addition, throughout the work Galbraith encourages readers to consider how to identify manias of the future and provides guidelines to help protect against the potential dangers of euphoria. Aside from its entertaining yet informative narrative, A Short History of Financial Euphoria stands as an accessible examination of speculative mania and the markets that foster it. Through its well-researched evidence and compelling logic, the book provides readers an invaluable historical and theoretical perspective on the dangers of exuberance.