Extraordinary Popular Delusions and the Madness of Crowds
Charles Mackay, 1841 — economics.
The original case file on collective financial insanity: Tulipmania, the Mississippi Scheme, the South Sea Bubble, documented in 1841 with a journalist’s eye and a coroner’s detachment. Every bubble since has replayed his chapters with updated tickers, which is the book’s real finding — the technology changes, the crowd does not. Mackay wrote before economics had equations, which is why he described the mechanism instead of assuming it away.
Why the engine keeps this on the shelf
Mackay supplies the asymmetry the engine encodes into drawdown modelling — euphoria collective and fast, sobriety individual and slow — while the Goldgar correction is why the shelf carries him as a mechanism, not as evidence.
The record
- Charles Mackay published it in 1841 in three volumes as Memoirs of Extraordinary Popular Delusions; the substantially revised two-volume second edition of 1852 carries the familiar 'and the Madness of Crowds' title.
- Its single most-quoted sentence, about men thinking and going mad in herds, sits in the preface rather than in the tulip chapter that made the book famous.
- Anne Goldgar's Tulipmania (University of Chicago Press, 2007) traced Mackay's tulip account back through an eighteenth-century intermediary to moralising seventeenth-century pamphlets, and found no bankruptcies or suicides attributable to the 1637 bust.
- Goldgar counted only 37 individuals who paid more than 300 guilders for a bulb — roughly a year's wages for a carpenter — meaning the canonical bubble narrative overstates both participation and economic damage.
Marked passages
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.
Asymmetric dynamics, 1841: euphoria is collective and fast, sobriety is individual and slow. The engine models drawdown recoveries on exactly this asymmetry.
In the author’s own words
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.
Mackay, Extraordinary Popular Delusions and the Madness of Crowds, Preface (1852 edition)
whole communities suddenly fix their minds upon one object, and go mad in its pursuit
Mackay, Extraordinary Popular Delusions and the Madness of Crowds, Preface (1852 edition)
Then and now
The Shiller CAPE ratio stood at 41.59 in August 2026, the 98.9th percentile of 1,748 months since 1881, with every higher reading on record set in 1999-2000. Source: Shiller CAPE ratio, Aug 2026 (Robert Shiller series)
Central banks bought a net 289 tonnes of gold in Q2 2026, up 62% year on year and the strongest second quarter in the series — a second herd moving the other way. Source: World Gold Council, Gold Demand Trends Q2 2026
The LBMA afternoon gold price averaged a record $4,873 per ounce in Q1 2026. Source: LBMA price via World Gold Council, Q1 2026 quarterly average
More on this shelf
- This Time Is Different: Eight Centuries of Financial Folly — Carmen M. Reinhart & Kenneth S. Rogoff, 2009
- Lords of Finance: The Bankers Who Broke the World — Liaquat Ahamed, 2009
- When Money Dies — Adam Fergusson, 1975
- Manias, Panics, and Crashes: A History of Financial Crises — Charles P. Kindleberger, 1978
- Stabilizing an Unstable Economy — Hyman P. Minsky, 1986
- The Ascent of Money: A Financial History of the World — Niall Ferguson, 2008
- Debt: The First 5,000 Years — David Graeber, 2011
- The Economic Consequences of the Peace — John Maynard Keynes, 1919
This text points at
The shelf exists because the engine reads it. See the Core, the projections, the sealed ledger, or all 81 texts.