ASSET INFLATED BUBBLES

Now, let’s jump back to the 1600s and a time of increased speculation,
specifically, the Netherlands in 1633. It is here where we witnessed the world’s
first “asset inflated bubble” from 1633-1637. First, what do we mean by an “asset
bubble”? Basically, it’s a sharp increase in the value of an asset which has no
relation to any fundamental economic reason, such as an increase in a product’s
quality or that it fills a needed demand for its use. So what was the first bubble?
Apparently, tulip bulbs. Tulips had become a huge status symbol in Europe, and
especially in the Netherlands. In fact, a single tulip bulb could be a bride’s dowry.
Houses and estates were mortgaged to buy rare bulbs so they could be resold, sight
unseen, to buyers. At its peak, a single bulb could sell for 10 times the annual
income of a skilled craftsman.

The belief was that the high prices would last forever and wealthy Europeans
would flock to buy them. There are, however, some modern scholars that
challenge the notion that there was a wide scale bubble burst in which many people
lost fortunes. Those scholars maintain that it was a relatively small number of
people who traded and lost. But the fact remains, there was an incredible increase
in the price of tulips, and then 4 years later it was gone. Does the psyche behind
that bubble sound familiar? Tulip prices will stay high forever, or “better get in
now while you still can.” As of the date of this publication, think about gold,
internet stocks, and contemporary art. It seems highly likely, that those assets are
experiencing a bubble. Take gold for instance, in October of 2007 gold sold at
$740 an ounce. A year later it was $1000 an ounce. In August of 2011, it sold for
$1800 an ounce. Recently, it has dipped down to roughly $1,720 an ounce, but
still significantly higher than 4 years ago. As for contemporary art, 2011 saw $5.5
billion of art sales in auctions alone, as compared to slightly over $1 billion in
2005.

Back to tulips and how this relates to Kabbalah. Perhaps it is no accident that the
first recorded bubble is literally due to seeds. This brings us to the Kabbalistic
concept of the planting of seeds, and the disconnect caused by time, space, and
motion. Every action we take, and even every thought we have, is a seed planted.
It has a consequence. Something will grow, either positive or negative. It is not a
question of “if,” it is a question of “when”. According to Kabbalah, there is no
such thing as "suddenly," such as: “He had a sudden heart attack”; “She suddenly
fell out of love”; “We suddenly ran out of cash”; or “The bottom suddenly fell out
of the market.” However, because of the existence of time, space and motion
(examples of physical laws of nature), there is often a distance or disconnect
between the planting of a seed and experiencing the fruit or effect of the planting.
And because of this disconnect, we often believe we have “gotten away with
something,” when there is a delay between the planting of a negative seed (a lie, a
crime, gossip, acting for the self alone) and the consequence of that planting.
Kabbalah tells us that we never get away without a reaction from an action. It may
take days, weeks, months, years, or even lifetimes, but there will always be a
consequence. And chaos may seem sudden because time has separated cause from
effect. Similarly, we may not see the benefits for a long time or even in our
lifetime of positive seeds being planted because of the disconnect of time, space
and motion. And just like believing “we got away with something,” in the case of
negative seeds, here we sometimes believe “it doesn’t pay to live by ‘the rules’ or
do the ‘right’ thing,” so we get discouraged and may alter our behavior and
choices. The important Kabbalistic lesson to take away here is that at the time we plant a seed, whether it be in our thoughts or actions, if we plant it without “an
agenda” or without the intention of acting for the self alone or to purposely hurt
another, the effect is irrelevant; we have already taken a step towards lasting
fulfillment.
As we pass through the numerous cycles of economic boom and bust, consider the
planting of a seed (the start of a bubble) and how long it takes before that bubble
bursts. But before we examine some of those other cycles, I want to point out
another significant historical event which fueled the world’s economic engine.
In 1651, the Great Assembly of the Netherlands adopted a Calvinist version of the
Reformation as the State’s religion. Why is that important? Predominantly,
because it removed the Catholic stigma associated with money lending, and
culturally internalized the doctrine of predestination-- namely, if virtuous people
are predestined to be saved in the hereafter, then it’s only logical that success in
this life is an advanced indication of God’s favor.