Ep 6. The Mississippi Bubble

In the sixth episode of Crashes and Crises: Lessons from a History of Financial Disasters, titled "The Mississippi Bubble," viewers are taken back to the 18th century for a look at one of the earliest financial bubbles in history. The episode delves into the life of John Law, a Scottish gambler and financier who was appointed as France's Controller General of Finances in the early 1700s.

Law proposed a radical new idea - the creation of a national bank that would issue paper money backed by the state's debts. This idea was met with both enthusiasm and skepticism, but it eventually gained widespread support. Law's bank began issuing notes that were accepted as currency, and the economy boomed as a result.

However, Law's ambitions didn't stop there. He also proposed the creation of a new company - a trading company that would have a monopoly on French trade with North America. The Mississippi Company, as it came to be known, was hugely successful, and its stock price skyrocketed. People from all walks of life, from peasants to nobility, eagerly invested their money in the company.

The fervor continued to build until the bubble burst, as bubbles always do. The Mississippi Company's stock price crashed, and people scrambled to sell before it was too late. The resulting panic caused the value of Law's paper money to plummet as well, leading to inflation and economic instability.

Viewers will see how Law's grand vision ultimately led to financial disaster, with the country left in ruins. But the episode isn't just a history lesson - it also examines the psychological and social factors that contributed to the Mississippi Bubble and other financial disasters throughout history. It's a cautionary tale about the dangers of unchecked ambition and blind faith in new, untested financial models.

Through interviews with financial experts and historians, as well as dramatic reenactments that bring Law's story to life, "The Mississippi Bubble" offers a fascinating glimpse into a pivotal moment in economic history. It underscores the importance of heeding the lessons of the past to prevent similar financial disasters in the future.