Tulips worth $1 million apiece, says Geithner, Bernancke, and Obama
By Craig J. Cantoni
It’s a little-known fact that in their prior lives, Timothy Geithner, Ben Bernancke, and Barack Obama were in charge of the Dutch economy during the tulip bubble, or mania, of 1634-36.
At the height of the bubble, when the equivalent of 12 acres of land and buildings was being exchanged for one tulip bulb, the dynamic trio in Gucci wooden shoes declared that it would be bad for the Dutch economy if tulip prices were allowed to fall to their pre-bubble prices. They came up with plan after plan to prop up tulip prices. All of the plans were based on the same idea: that prudent people who didn’t loan or borrow money to buy tulips should be forced to fork over money to those who did.
“We have to keep putting money into toxic tulips,” said Geithner, who was the Dutch treasury secretary at the time. “If we don’t prop up tulip prices, capital will go to more productive uses like ship building or dike construction.”
Dutch King Barack Obama backed his treasury secretary. “Sir Timothy is talking sense. When I was a community organizer in Amsterdam, I worked with ACORN to make sure that ne’er-do-wells had tulips. It would be unjust to take their tulips away from them.”
In testifying before the Provincial Council at the Hague, the head of the Dutch central bank, Ben Bernancke, said that Britain, France, and Spain would be upset if tulip prices fell, because they had loaned money to the Dutch to buy tulips. “The value of the florin [Dutch dollar] will fall if we let tulip prices fall and can’t pay back the loans,” Bernancke said.
Enough parody. Let’s switch to historical facts.
As the Dutch tulip bubble began to deflate in 1636, the Provincial Council actually attempted to force buyers and sellers of tulips to either continue to pay inflated prices or to submit to a government auction. However, the Dutch high court ruled that debts incurred in gambling were not debts in law. In other words, people who bought tulips at crazy prices were gambling, just as Americans who would later buy homes at crazy prices were gambling. Of course, it didn’t matter what the court ruled, because inflated tulip prices were unsustainable economically and were going to crash sooner or later.
Fast forward to present-day America: Last week, as I do every week, I bought flowers for my wife at Wal-Mart. This time they were tulips imported from Holland. The price was $5. Think of that. For only five bucks, tulips were grown in Holland and, through logistical brilliance born from market competition, were flown to the United States and trucked to my local Wal-Mart fresh enough to last a week after I had purchased them.
There are actually Americans who believe that it would be better for the economy if I had bought the tulips (or a house) at a wildly inflated price with easy credit instead of a true, undistorted market price with sound money. Unfortunately, the imbeciles are heading our government.
An author and columnist, Mr. Cantoni can be reached at email@example.com.