LazerusAbenenduli There's a fine line between genius and madness, as the saying goes. What a genius and someone who's mad have in common is that they think in unconventional ways.
6:30 "Everybody wanted to get into the Stock Market game....some of these were legitimate enterprises which were developed sections of the British economy that hadn't taken off yet...others offered such exciting products as a device to draw the moisture from the human brain [or] a flying machine!" Holy Shit, John Blunt invented Kickstarter.
I can't tell if you're legitimately stupid or just ignorant. It's almost like you don't know what a stock company is, how they are formed, and how the founders get money to pursue their business idea (which, by the way, has been going on for over 400 years, far before Blunt was even born).
Sigh. This is what happens when someone has a bit of knowledge but lacks common sense or people skills. Box, this is what is known as humor. We're making humorous parallels between modern complaints about crowdfunding and the complaints that have existed about traditional investments since their inception.
BoxStudioExecutive The joke went right over your head. That wasn't really the point. It is the fact that these companies were asking people to invest in crazy as hell ideas in order to get money. At this point, people were forming companies merely for the sake of it because the success of the South Sea Company caused people to become extremely interested in investing, even if they were low-class (and therefore knew close to nothing about it) or if the company basically didn't do anything (you know, like Kickstarter). There was literally a company that called itself "a company for carrying out an undertaking of great advantage, but nobody to know what it is."
I'm baffled by all this financial talk, but so far what I've been able to tell is that the South Sea Company somehow made stacks of money purely off hype?
Basically that's it. Blunt started by hyping up how awesome his new trading company was going to be, which secured initial investment. Then more people invested because the investment increased the value of the company. At that point you end up with near exponential investment, especially when Blunt starts his schemes to keep the price rising. Essentially how it works is: The South Sea company's sole source of income is from selling shares, the act of selling shares increases the value of the company and thus increases the share price, the increase in value gives the illusion that the company is incredibly prosperous which encourages more investment from people seeking to have a slice of that pie, which increases the value of the company and keeps fueling the illusion. Rinse and repeat over and over and you end up with a bubble which pops once the market realises that the company isn't worth anywhere near what it's share price is, resulting in a rather spectacular readjustment that causes all that illusionary value to suddenly disappear back into the thin air from which it was created.
Draczar Actually, the company was originally going to be doing totally legit trading in the South Seas; Blunt got wrangled into these shenanigans of spending money he didn’t have when it turned out that Spain wouldn’t let him do it.
Oh lord. Im just sitting here whispering to myself: Cash it in John, cash it in while there is still cash to be had. Cash that sucker in and move to Russia or something. They never cash it in. They keep riding the gravy train right into the ground.
Yeah. I mean, when your company had more exaggerated worth than the actual amount of cash that exists in your country, that is definitely the time to take profits and run. I mean how much extra money was he expecting to earn? You can't earn more money than "all the money in the country".
@@VallenChaosValiant what about expanding to the next country over? :) if you lie to France too, you could have more money than England, France, AND RUSSIA COMBINED :D imagine if you learn Russian......:O
@@darthparallax5207 I think at some point some monarch would get insulted over some imagined slight, have you executed/disappeared and your stuff seized.
Oh dear lord, I want a comedy movie of this. A Monty Python by way of Mel Brooks sort of movie about the south sea company. These events are almost too funny to think about.
You should watch Adam McKay's 'The Big Short' about the Great Recession and the 2008 Financial Crisis. It's halfway between a comedy and a horror story.
reminds me of the South Park episode about economics: "then we'll reinvest the earnings into foreign currency accounts with compounding interest aaand it's gone!"
The great thing about this particular series is that whilst John Blunt is doing reprehensible things, he probably had one of the best financial minds ever.
He's a guy that you'd like to pat on the back for doing things in such a creative and beneficial way before punching him for doing something clearly morally wrong. As John Oliver says, "Pat Punch".
Msoulwing Not really. He followed his generals straight into the ground, only making his own terrible strategic decisions long after they would've doomed Nazi Germany on their own. It's the Nazi catch-22: In order for Nazi Germany to win WW2, they would've had to not be Nazis; but if they weren't Nazis, they wouldn't have started WW2.
Yep. Same thing happened recently, and with the market crash in 1929. It's why if you watch any of the business channels, all they ever do is talk about "overvalued" or "undervalued" when discussing stocks.
So to put that in perspective the American economy was around the 17 trillion mark at rhe time that means the us economy about 20% of the world economy and China likely being around 15% that means 35% of the global economy was codependent at the time and that's just the largest codependent relationship. The EU would be around 15 as well along with Russia. India was the third largest economy at the time and still is probably closer to ten. 5 markets being 75% of global GDP with the majority of what's left being US allies and trade partners really puts globalization in perspective. Tldr America and China dictate the world economy through shear size. Disclaimer I rounded percentages a lot making them smaller and most were estimates rather than hard number crunching
I get the feeling this will end with the red coats surrounding Blunt's manor, only for him to escape in the flying machine that everyone thought was myth.
I've been building an RPG setting these past few weeks based around the whole "early days of capitalism" 1700's era mixed with Welsh mythology, these videos have helped a lot in building the corrupt and exploitative organisations, thanks guys!
I'm right there with you, Hope. This installment made a lot more sense to me than the previous ones, but man, it takes a special kind of crazy to roll like Blunt.
Hopeofmen Some basic definitions: Loan: A large amount of money given at once, that is paid back long term, plus interest. You take $100 loan at a one percent interest a week. Each week you owe me an extra dollar. In ten weeks, you pay me back $110. All your unpaid loans are called debt. Unconsolidated debt: This is "unorganized" debt, due to many different people. Consolidating debt is basically taking the various different debts and putting it all together for one debt with one interest rate you have to pay for. Stocks: A small unit of ownership in a company. If a company has 100 stocks, a person owning 1 stock owns 1 percent of the company. Selling stocks gives a company money in the short term, allowing to expand business without having to take out a loan. Stock prices: How much people are willing to pay for a stock. A high stock price indicates that there are only a few stocks on the market and/or people are willing to pay more for a given stock. A low stock prices there are a lot of stocks on the market or people aren't willing to pay much for it. Revenue: Money made over some period of time. You can be losing money but generating revenue. Say your business spends 100 dollars a week, but only makes $70. While you have, in effect, lost $30, you still have made $70 dollars in revenue. Profit: Revenue that is greater than the amount you spent. If your company spends $100 in a week, and makes $130, only $30 is profit. All $130 is revenue.
LvLupXD Or else they knew it would end badly but thought they could take the money and run before it all fell to pieces. Take the housing crash in the US: A lot of the people who were peddling bad mortgages pocketed lavish bonuses and came out of the mess smelling like roses.
erttheking Hell at least they were some of the first to try this. Think about the US stock market in the 30's. People literally knew about this, did the exact same kind of shit by buying and selling stock in companies that weren't actually growing, and then one day everyone's money disappears.
erttheking When your making money beyond anything you could ever imagine, without putting a single bit of effort besides buying some stocks, it is hard to question where all this money was coming from.
erttheking I just saw a ship with a drunk captain, spinning faster every second and with less time to go out at every moment. That and a couple of parliament members drinking tea on an active bomb.
The King of England being able to be the head of a particular company within his nation is like, if not worse, than a teacher having a relationship with one of their students. Or a superior officer in the military fraternizing with somebody directly under their command. The latter one is probably a better example, because, like. If the higher ranking officer needs to tell their lover to go on a dangerous mission, are they really going to be able to do it? Or will they change things around and play these kinds of games to protect their own personal interests?
Just want to say "Thanks." I home school my fourth grader -- and this series has my nine year old on the edge of his seat, eager for the next episode. I have a Ph.D. in Economic History, so of course I love this stuff. Thanks to you guys, I am enjoying sharing my love of obscure financial history with my son several years before I expected. Congratulations. And thanks, again.
That’s really cool! A lot of people don’t see any of UA-cam as educational, so it’s really amazing that you use the excellent resources online to help your child learn!
I like the idea that these people used crowd funding to finance fanciful ideas like flying machines and brain drainers. It's like a 19th Century Kickstarter. It's funny how this entire situation is both a lesson in why markets need some form of regulation and at the same time, shows the potential dangers when government officials are too close to an industry to make objective decisions. I love the Extra Credit History series. Keep up the great work!
Sadly, there's nothing really unusual about a company whose only source of revenue is their own stock price going up. The stock market produces nothing (literally, as a fundamental rule of its own existence, it produces nothing) except bad incentives, motives to engage in reckless and dishonest behavior like this. As near as I can tell, every financial crisis throughout history has had the same cause: a temporary bubble gives bad investments (or bad credit) a positive return, making it profitable to invest in failing businesses... and people seize on that until the bubble bursts and everyone realizes they've dug themselves in too deep to get out. It's what caused the South Sea Bubble, it's what caused the Great Depression, and it's what caused the current financial crisis that we're still wading through.
***** The Opium wars are a hilariously British exception to this, but you are right; making money via stock is probably something we should have outlawed by now.
Not all bubbles are scams though. You may buy stocks because you geniunely believe that company is worth owning a part of, but you MAY have been fooled. These scams are financial crimes - often (like the south sea bubble) they even break clauses of agreed upon documents, and/or commiting even more (worse) crimes in the whole process. The problem is, if someone is scammed for thousands, the scammer must answer for his crimes. If a nation is scammed for billions though, the thing gets so big it often can't even be traced back to it's mastermind, and the very market the scam was set in may suffer a domino effect, and even non-involved persons will suffer, as banks break and inflation skyrockets.
I disagree. The stock market does provide one function which is overlooked by that viewpoint: it connects investors with businesses. In other words, it's a standardized way that people can put money into enterprises and get a return (wonderful dividends); without it, most people who are now investors in various companies would not have the capital to make a normal loan. The stock market also allows sell portions of a company; in other words, they allow amalgamated goods to be liquidated. It's akin to a middleman, who was long lampooned as a leach, but provides a necessary, and price-reducing, service. Perhaps an analogy would help explain: say you, as a customer, go to a farmers' market where there is an actual air-conditioned building called the Farmers' Market (stock market), but you are still buying directly from farmers who have set up booths, and you find a farmer selling bean sprouts in self-irrigating containers (these plants are the stock). You buy the sprouts, not because you want the plant, but because the farmer has promised that it will produce a certain number of beans in a certain amount of time. Now you can harvest from the plant (dividends) and you can re-sell the plant (trade the stock). If the plant produces more beans than promised, the price at which you could re-sell it would rise. If it produces less, the price will fall. This price is also influenced by the performance of other plants sold by the farmer, whoever got them. Now, if the plant withers and dies because the container was faulty, you lose your investment. This is not the fault of the Farmers' Market, the air-conditioned place of business which collected producers for your convenience, but the farmer who sold the plant and you as a customer. The thing to remember is that the thing being bought and sold is portions of a company or, as one may put it, the mechanisms of production combined with the promise of future productivity. In the South Sea Bubble, mass investments in a sham enterprise (starting with and upheld by governmental shenanigans) brought disaster. In the Great Depression, a combination of over-subsidized farming (leading to too many farmers), the Dust Bowl, and Hoover's economic meddling (including the welfare programs which would form the basis of the new deal, the infamous plea not to lay off workers, the Smoot-Hawley Tariff, and the Revenenue Act of 1932) all worked together to cause a severe decline in wages, investments, and general economic well being which was best reported, but not caused, by the stock market. I won't go into current events because that's a.) more emotionally charged, b.) we don't have hindsight perspective quite yet, and c.) this is already too hilariously long. In conclusion, the stock market provides a useful service. P.S. While governmental shenanigans were a cause in the above cases, I am not here making the case that it is entirely or always the government at fault, merely that the stock market is useful.
You know, my history teacher once said "We'll skip over this economic fluff" (In regards to something that wasn't the reperations agreement, i forget what specifically) but you guys make it super interesting :D Can't wait to see this house of cards fall down, and how many of them land in Mr. Blunt's hat XD
These Extra History videos are great for supplemental learning videos for my homeschooling neighbors and I. Every topic becomes interesting, fun and surprisingly clear with EH! Thanks EC!
6:56 KICKSTARTER. THIS WAS DANG ENGLAND DOING A NATIONWIDE KICKSTARTER. What the hell. "Flying machine, coming soon with your money. Invest 40 pounds and GET ONE...when they come out...if it ever comes out....
So, Hang on. Did the south sea company EVER actually DO any trading in the south sea....ever? this entire company seems to be afloat on money they never existed in the first place.
Well the peace deal with Spain only allowed access of 1 British ship per year to each of the ports in the South Sea. And it turns out the South Sea Company was really bad at trading, so they only managed to lose money.
oh man, if I was Blunt I woulda cashed in my chips right there and bought my own private island, far away from where this thing was gonna burst. But then, there were plenty of opportunities for him to get out, but he always kept pushing it.
These Extra History videos are exceptional. My courses on English history only mentioned the South Sea Bubble. Now I can learn all the details, and they've been fascinating! Also I greatly approve of using Tweex's music at the end of the video -- I love that album.
LOL! This is great, even though I can keep up with all the machinations and my head is spinning. Highly entertaining, though. The cartoons are great, Very simple but expressive. LOVE the last picture of the falling anvil over an smiling Blunt.
heroiamarelo I would say around 8 as well. A charachter with high intelligence would have seen the "lets print money out of nothing" approach as unfeasable or outright bonkers.
Wow, what are you doing? Are you kidding me! How can you not see the economy collapsing, Blunt! Seriously Blunt, you're mad if you think you can keep money coming out of thin air! You're a madman thinking this will work! Just abandon ship, go to Russia or someplace like that and leave your co-conspirators behind! Do it Blunt, DO IT!!!! -Me this entire episode.
I have always enjoyed learning. I was the dork in school that couldn't pick a favorite subject. I loved them all! But one subject I hated, one that I would totally zone out in, was economics and finance. I don't know; I just find these topics to be dull. However, this series has changed that a bit. This is truly fascinating.
If you actually had a decent condition South Sea Company stock certificate, you -could conceivably sell it for thousands to a collector- should sell it to me for $20.
You guys are one of my favorite channels on youtube! Your history videos are my favorite videos on all of the platform. Thanks for great videos, and keep it up!
Except that these guys made a company worth about 300 MILLION Punds(k Pound isn't exactly a US Dollar but It's close). And yeah BTW they made all their cash out of nowhere.
No. If you bought stock at that time you still owned a share of the incredibly productive US industry even after the bubble popped. You may have overpaid for it, but the fundamental asset being traded was a fundamentally very valuable one. When the south sea bubble burst, people were left with _nothing_. Not even a tulip. A better modern metaphor would be bitcoin.
I haven't studied it as I should, but isn't it true that the shares were enormusly undervaulated after the 29 crisis, leaving everybody with nothing to trade for the assets that were held, not even able to sell them since no one was buying?
Fun fact: Jules Verne roasts the hell out of England for this in Around the World in 80 Days, when wagers about Foggs wager kicks off a stock market craze.
Honestly, if he wasn’t so greedy, he probably could’ve done a far more reserved scale of this, and actually really benefited Britain, which is kind of crazy. Had he reinvested all of the ludicrous profits from stock price rises into keeping the company rich and ready to pay its dividends, and if there was no artificial market manipulation, there’s a solid chance that he could’ve consolidated and paid off most of the debt quite effectively until Britain expanded its shipping rights in the south seas.
English Government: What does south sea company make? SSC: What do you mean, like, how much money does the company make? English Government: oh no I mean *what* do you make? SSC: I don't follow. We make money English Government: No, I know you make money, I mean what do you create? SSC: We create wealth.
it's increidble to see how one person can manipulate and make huge changes in a whole country or even the whole world. That makes it increidble and dangerous.
Thanks to this series, I love history now. I just bought a book called: "Las legiones malditas" (The cursed legions) from Satiago Posteguillo, a novel about a roman general at the punic wars against Anibal. great book. The south sea company history really interested me into economics.
So how is it we know details this indepth, parliament records, bank of England records and even the South Sea Company must of had records. Even then there is a surprising amount of information, which said records wouldn't of covered.
The amount of money that we are dealing with here is staggering. At the very least, we can use parliamentary records, bank records, and stock records to figure out what was going on. We also have comics and paintings that were made at the time that depict these events in rather hilarious detail.
gotta wonder how well mister blunt would be doing nowadays, on the one hand, making money off of hype has never been easier, on the other, sceptics have much faster ways of investigating and communicating.
James Blunt is either one of the greatest financial geniuses of all time, or just completely and utterly mad.
i'd bet on both.
He literally made bonkers amounts of money from nothing. That's quite a feat, even if criminal.
more like greedy if you ask me. that is some devious plan before Wall street born.
LazerusAbenenduli "I did it for the lulz." -John Blunt
LazerusAbenenduli There's a fine line between genius and madness, as the saying goes. What a genius and someone who's mad have in common is that they think in unconventional ways.
Company that uses government debt to make more money than the nation itself has? Now that is just rich.
Right!? It's so sneaky it's difficult to describe.
The original hustlers
and that's the reason why every country is in debt.
***** Yeah, they don't get rich out of nowhere, at least most of the time.
The middle east is an exception.
***** But what if you're already a crazy Arab?
I think crazy is fairly relative.
6:30 "Everybody wanted to get into the Stock Market game....some of these were legitimate enterprises which were developed sections of the British economy that hadn't taken off yet...others offered such exciting products as a device to draw the moisture from the human brain [or] a flying machine!"
Holy Shit, John Blunt invented Kickstarter.
pocketlint60 That was the exact thought that went through my head too! "That sounds an awful lot like Kickstarter"
I can't tell if you're legitimately stupid or just ignorant. It's almost like you don't know what a stock company is, how they are formed, and how the founders get money to pursue their business idea (which, by the way, has been going on for over 400 years, far before Blunt was even born).
Sigh. This is what happens when someone has a bit of knowledge but lacks common sense or people skills. Box, this is what is known as humor. We're making humorous parallels between modern complaints about crowdfunding and the complaints that have existed about traditional investments since their inception.
BoxStudioExecutive The joke went right over your head. That wasn't really the point. It is the fact that these companies were asking people to invest in crazy as hell ideas in order to get money. At this point, people were forming companies merely for the sake of it because the success of the South Sea Company caused people to become extremely interested in investing, even if they were low-class (and therefore knew close to nothing about it) or if the company basically didn't do anything (you know, like Kickstarter).
There was literally a company that called itself "a company for carrying out an undertaking of great advantage, but nobody to know what it is."
BoxStudioExecutive ...
I'm baffled by all this financial talk, but so far what I've been able to tell is that the South Sea Company somehow made stacks of money purely off hype?
Basically that's it. Blunt started by hyping up how awesome his new trading company was going to be, which secured initial investment. Then more people invested because the investment increased the value of the company. At that point you end up with near exponential investment, especially when Blunt starts his schemes to keep the price rising.
Essentially how it works is: The South Sea company's sole source of income is from selling shares, the act of selling shares increases the value of the company and thus increases the share price, the increase in value gives the illusion that the company is incredibly prosperous which encourages more investment from people seeking to have a slice of that pie, which increases the value of the company and keeps fueling the illusion.
Rinse and repeat over and over and you end up with a bubble which pops once the market realises that the company isn't worth anywhere near what it's share price is, resulting in a rather spectacular readjustment that causes all that illusionary value to suddenly disappear back into the thin air from which it was created.
Thanks for clarifying!
Draczar Actually, the company was originally going to be doing totally legit trading in the South Seas; Blunt got wrangled into these shenanigans of spending money he didn’t have when it turned out that Spain wouldn’t let him do it.
@@Draczar tks for explaining
It's basically 2008 financial crisis with funny wigs
Oh lord.
Im just sitting here whispering to myself: Cash it in John, cash it in while there is still cash to be had. Cash that sucker in and move to Russia or something.
They never cash it in. They keep riding the gravy train right into the ground.
Yeah. I mean, when your company had more exaggerated worth than the actual amount of cash that exists in your country, that is definitely the time to take profits and run. I mean how much extra money was he expecting to earn? You can't earn more money than "all the money in the country".
@@VallenChaosValiant what about expanding to the next country over? :) if you lie to France too, you could have more money than England, France, AND RUSSIA COMBINED :D
imagine if you learn Russian......:O
@@darthparallax5207 I think at some point some monarch would get insulted over some imagined slight, have you executed/disappeared and your stuff seized.
@@darthparallax5207 John law was busy there
But I guess it's good that most criminals get themselves caught
I wouldn't let something as petty as being locked in the Tower of London stop me from making something out of it . . . or would I?
Robert Walpole amen brother
Robert Walpole Of course not
Why let a little imprisonment get in the way a good power grab
You're awesome, bud!
Hey Walpole, some fun shenanigans seem to be happening with Gamestop lately...
Oh dear lord, I want a comedy movie of this. A Monty Python by way of Mel Brooks sort of movie about the south sea company. These events are almost too funny to think about.
Terry pratchett going postal or making money
Can i like this twice?
British Gov: we shall charge an interest of...ONE MILLION POUNDS!
Blunt: lolz
You should watch Adam McKay's 'The Big Short' about the Great Recession and the 2008 Financial Crisis. It's halfway between a comedy and a horror story.
Omg thats is genius, someone tweet a film director
reminds me of the South Park episode about economics: "then we'll reinvest the earnings into foreign currency accounts with compounding interest aaand it's gone!"
Why are there no replies?
The great thing about this particular series is that whilst John Blunt is doing reprehensible things, he probably had one of the best financial minds ever.
He's a guy that you'd like to pat on the back for doing things in such a creative and beneficial way before punching him for doing something clearly morally wrong.
As John Oliver says, "Pat Punch".
aaronman4772 Small pat, big punch.
aaronman4772
Exactly the sentiment I was wishing to convey.
Obviously what he did was wrong, but he was creative enough to dream of it all.
Msoulwing Not really. He followed his generals straight into the ground, only making his own terrible strategic decisions long after they would've doomed Nazi Germany on their own.
It's the Nazi catch-22: In order for Nazi Germany to win WW2, they would've had to not be Nazis; but if they weren't Nazis, they wouldn't have started WW2.
Great mind will become if he doesn't blinded by greed.
I swear, John Blunt is a James Bond villain.
Blunt never Monologued his plans!
If there was a Bond villain James Bond couldn't beat, it's Blunt.
A moneymancer
I can see Sherlock Holmes have a go at Blunt...
HMMMMMMMMMMMM
wait so all these profits were made on absolutely nothing but the perceived value of the stock which was periodically hyped up to stay afloat?
Exactly what happened in the recent financial crisis.
Yep. Same thing happened recently, and with the market crash in 1929. It's why if you watch any of the business channels, all they ever do is talk about "overvalued" or "undervalued" when discussing stocks.
It is the no man's sky financial version
Isn't that how the value of money is "created'?
Like Bitcoin
To put further perspective on $85 trillion. The gross world product, the GNP of every country in the world combined, was $75 trillion in 2013.
So to put that in perspective the American economy was around the 17 trillion mark at rhe time that means the us economy about 20% of the world economy and China likely being around 15% that means 35% of the global economy was codependent at the time and that's just the largest codependent relationship. The EU would be around 15 as well along with Russia. India was the third largest economy at the time and still is probably closer to ten. 5 markets being 75% of global GDP with the majority of what's left being US allies and trade partners really puts globalization in perspective.
Tldr America and China dictate the world economy through shear size.
Disclaimer I rounded percentages a lot making them smaller and most were estimates rather than hard number crunching
I get the feeling this will end with the red coats surrounding Blunt's manor, only for him to escape in the flying machine that everyone thought was myth.
YES. This bubble is about to burst. It will be glorious.
so. much. money. to vanish. lol
The pop of this bubble will be heard on mars, even if there's no air in space to transmit the sound.
Ashley With a blunt needle
Well that would cause well you saw what happened.
I actually can't decide if I admire Blunt or not for having pulled all this off for so long.
You can admire the skill involved to actually accomplish something without agreeing with that thing
I've been building an RPG setting these past few weeks based around the whole "early days of capitalism" 1700's era mixed with Welsh mythology, these videos have helped a lot in building the corrupt and exploitative organisations, thanks guys!
Damn, that sounds really cool!
Hows the game doing
yeah hows the game doing
@@Wittgenstein. I played a few games of it in the Fantasy Age system, but it got too much work to GM anymore, haven't touched it since.
All this economics lingo is making my head spin.
Yeah. I actually thought it was explained quite well.
Perhaps it's just me. I was groggy from waking up. >_>
basically a guy made money by manipulating the economy and buying the British government.It didn't work.
I'm right there with you, Hope. This installment made a lot more sense to me than the previous ones, but man, it takes a special kind of crazy to roll like Blunt.
Hopeofmen Some basic definitions:
Loan: A large amount of money given at once, that is paid back long term, plus interest. You take $100 loan at a one percent interest a week. Each week you owe me an extra dollar. In ten weeks, you pay me back $110. All your unpaid loans are called debt.
Unconsolidated debt: This is "unorganized" debt, due to many different people. Consolidating debt is basically taking the various different debts and putting it all together for one debt with one interest rate you have to pay for.
Stocks: A small unit of ownership in a company. If a company has 100 stocks, a person owning 1 stock owns 1 percent of the company. Selling stocks gives a company money in the short term, allowing to expand business without having to take out a loan.
Stock prices: How much people are willing to pay for a stock. A high stock price indicates that there are only a few stocks on the market and/or people are willing to pay more for a given stock. A low stock prices there are a lot of stocks on the market or people aren't willing to pay much for it.
Revenue: Money made over some period of time. You can be losing money but generating revenue. Say your business spends 100 dollars a week, but only makes $70. While you have, in effect, lost $30, you still have made $70 dollars in revenue.
Profit: Revenue that is greater than the amount you spent. If your company spends $100 in a week, and makes $130, only $30 is profit. All $130 is revenue.
And this is how you make the seemingly uninteresting, interesting. You tell tall tales that also happen to be true.
How the shit did anyone think this was going to end well!?
Lack of foresight. They saw the money in the future but didn't think about the consequence of creating profits from nothing.
LvLupXD Or else they knew it would end badly but thought they could take the money and run before it all fell to pieces. Take the housing crash in the US: A lot of the people who were peddling bad mortgages pocketed lavish bonuses and came out of the mess smelling like roses.
erttheking Hell at least they were some of the first to try this. Think about the US stock market in the 30's. People literally knew about this, did the exact same kind of shit by buying and selling stock in companies that weren't actually growing, and then one day everyone's money disappears.
erttheking When your making money beyond anything you could ever imagine, without putting a single bit of effort besides buying some stocks, it is hard to question where all this money was coming from.
erttheking I just saw a ship with a drunk captain, spinning faster every second and with less time to go out at every moment. That and a couple of parliament members drinking tea on an active bomb.
Here is my repeated reaction to the information presented in this video:
"WHAT!?"
Seriously, the daring madness at display here is staggering.
It's almost enough to make the Wolf of Wall Street blush
This is one of the best cases I have ever heard for the separation of market and state.
The King of England being able to be the head of a particular company within his nation is like, if not worse, than a teacher having a relationship with one of their students. Or a superior officer in the military fraternizing with somebody directly under their command. The latter one is probably a better example, because, like. If the higher ranking officer needs to tell their lover to go on a dangerous mission, are they really going to be able to do it? Or will they change things around and play these kinds of games to protect their own personal interests?
That's literally impossible, as the government issues currency and taxes that.
Just want to say "Thanks."
I home school my fourth grader -- and this series has my nine year old on the edge of his seat, eager for the next episode.
I have a Ph.D. in Economic History, so of course I love this stuff. Thanks to you guys, I am enjoying sharing my love of obscure financial history with my son several years before I expected.
Congratulations. And thanks, again.
That’s really cool! A lot of people don’t see any of UA-cam as educational, so it’s really amazing that you use the excellent resources online to help your child learn!
I like the idea that these people used crowd funding to finance fanciful ideas like flying machines and brain drainers. It's like a 19th Century Kickstarter. It's funny how this entire situation is both a lesson in why markets need some form of regulation and at the same time, shows the potential dangers when government officials are too close to an industry to make objective decisions.
I love the Extra Credit History series. Keep up the great work!
2:30 With members of parliament receiving a small loan of a million dollars.
This is bigger than Trump himself!
I guess Blunt isn't all that sharp after all
Some would say he's, blunt.
Yes, thank you for your contibution
AAAAAAAAAHHHHHHHHHHHH
Yeah, thanks, totally necassary
What does that even mean?
Sadly, there's nothing really unusual about a company whose only source of revenue is their own stock price going up. The stock market produces nothing (literally, as a fundamental rule of its own existence, it produces nothing) except bad incentives, motives to engage in reckless and dishonest behavior like this.
As near as I can tell, every financial crisis throughout history has had the same cause: a temporary bubble gives bad investments (or bad credit) a positive return, making it profitable to invest in failing businesses... and people seize on that until the bubble bursts and everyone realizes they've dug themselves in too deep to get out. It's what caused the South Sea Bubble, it's what caused the Great Depression, and it's what caused the current financial crisis that we're still wading through.
Very well put :)
***** The Opium wars are a hilariously British exception to this, but you are right; making money via stock is probably something we should have outlawed by now.
Not all bubbles are scams though. You may buy stocks because you geniunely believe that company is worth owning a part of, but you MAY have been fooled.
These scams are financial crimes - often (like the south sea bubble) they even break clauses of agreed upon documents, and/or commiting even more (worse) crimes in the whole process.
The problem is, if someone is scammed for thousands, the scammer must answer for his crimes. If a nation is scammed for billions though, the thing gets so big it often can't even be traced back to it's mastermind, and the very market the scam was set in may suffer a domino effect, and even non-involved persons will suffer, as banks break and inflation skyrockets.
I disagree. The stock market does provide one function which is overlooked by that viewpoint: it connects investors with businesses. In other words, it's a standardized way that people can put money into enterprises and get a return (wonderful dividends); without it, most people who are now investors in various companies would not have the capital to make a normal loan. The stock market also allows sell portions of a company; in other words, they allow amalgamated goods to be liquidated. It's akin to a middleman, who was long lampooned as a leach, but provides a necessary, and price-reducing, service. Perhaps an analogy would help explain: say you, as a customer, go to a farmers' market where there is an actual air-conditioned building called the Farmers' Market (stock market), but you are still buying directly from farmers who have set up booths, and you find a farmer selling bean sprouts in self-irrigating containers (these plants are the stock). You buy the sprouts, not because you want the plant, but because the farmer has promised that it will produce a certain number of beans in a certain amount of time. Now you can harvest from the plant (dividends) and you can re-sell the plant (trade the stock). If the plant produces more beans than promised, the price at which you could re-sell it would rise. If it produces less, the price will fall. This price is also influenced by the performance of other plants sold by the farmer, whoever got them. Now, if the plant withers and dies because the container was faulty, you lose your investment. This is not the fault of the Farmers' Market, the air-conditioned place of business which collected producers for your convenience, but the farmer who sold the plant and you as a customer.
The thing to remember is that the thing being bought and sold is portions of a company or, as one may put it, the mechanisms of production combined with the promise of future productivity. In the South Sea Bubble, mass investments in a sham enterprise (starting with and upheld by governmental shenanigans) brought disaster. In the Great Depression, a combination of over-subsidized farming (leading to too many farmers), the Dust Bowl, and Hoover's economic meddling (including the welfare programs which would form the basis of the new deal, the infamous plea not to lay off workers, the Smoot-Hawley Tariff, and the Revenenue Act of 1932) all worked together to cause a severe decline in wages, investments, and general economic well being which was best reported, but not caused, by the stock market. I won't go into current events because that's a.) more emotionally charged, b.) we don't have hindsight perspective quite yet, and c.) this is already too hilariously long.
In conclusion, the stock market provides a useful service.
P.S. While governmental shenanigans were a cause in the above cases, I am not here making the case that it is entirely or always the government at fault, merely that the stock market is useful.
Mandos Aldmer The credit crunch was caused by a scam though.
give me 40 Extra History shares
No
Sai Smith OHHHHHH
I'll take double that
Minrod Vils Well the debt is 100.000.000£ and the shares value is 190 £
I'll take 51% of their available shares. EH IS MINE!
It's beautiful, in a "doomed to fail" sort of way.
You know, my history teacher once said "We'll skip over this economic fluff" (In regards to something that wasn't the reperations agreement, i forget what specifically) but you guys make it super interesting :D Can't wait to see this house of cards fall down, and how many of them land in Mr. Blunt's hat XD
this is fucking ridiculous! this blunt dude is a madman
A genious madman. Making that much money out of nothing takes a lot of intelligence and good planning.
***** He is like the Walter White of England!
***** A wealthy madman.
He's exactly the person I need to be the business co-founder at any startup I create.
Dr. Duck: gaming the slow way Until he gets arrested for a major financial scheme.
These Extra History videos are great for supplemental learning videos for my homeschooling neighbors and I. Every topic becomes interesting, fun and surprisingly clear with EH! Thanks EC!
Going over this in history class. Jump up and scream at the teacher: NO SPOILERS!
xD Made my day xD
your learning this in history class?! I wish I learned about interesting things in history class.
Liam Baillargeon You did, you were just not interested at the time.
Liam Baillargeon probably he is a Brit ...
I was about to ask when kids started to learn English history. Then I realized kids in England probably don't learn American history...
6:56 KICKSTARTER. THIS WAS DANG ENGLAND DOING A NATIONWIDE KICKSTARTER. What the hell. "Flying machine, coming soon with your money. Invest 40 pounds and GET ONE...when they come out...if it ever comes out....
yup
So, Hang on. Did the south sea company EVER actually DO any trading in the south sea....ever? this entire company seems to be afloat on money they never existed in the first place.
Well the peace deal with Spain only allowed access of 1 British ship per year to each of the ports in the South Sea. And it turns out the South Sea Company was really bad at trading, so they only managed to lose money.
Major ports.
oh man, if I was Blunt I woulda cashed in my chips right there and bought my own private island, far away from where this thing was gonna burst. But then, there were plenty of opportunities for him to get out, but he always kept pushing it.
I drool when I see that much money being made with no actual effort.
These Extra History videos are exceptional. My courses on English history only mentioned the South Sea Bubble. Now I can learn all the details, and they've been fascinating!
Also I greatly approve of using Tweex's music at the end of the video -- I love that album.
LOL! This is great, even though I can keep up with all the machinations and my head is spinning. Highly entertaining, though. The cartoons are great, Very simple but expressive. LOVE the last picture of the falling anvil over an smiling Blunt.
And over here kids, we have a perfect specimen of a mad genius! Seriously, this guy may be corrupt as anything, but he was ridiculously smart.
This series is teaching me just how little I know about economics, because I have a hard time following what's going on.
Again, a very well done and articulated piece!!
Thank you Extra Credits for making such an awesome show!!! \^^/
Man, the nostalgia with the FFXI music at the end. You guys are awesome!
Bloody hell, this had me laughing out loud with other people in the room.
These shenanigans are impossibly tomfoolerous.
It's interesting how we never learned anything about this subject in class. Very interesting! Looking forward to the next episode.
How smart must someone be to create such a smart plan?
10.
20 INT skill. You'll need to roll 18 for abilities and then have a race that gives you +2 INT
heroiamarelo I would say around 8 as well. A charachter with high intelligence would have seen the "lets print money out of nothing" approach as unfeasable or outright bonkers.
Lorien vArden No, that is a character with low wisdom score. He rolled a 1 on his perception check. :(
High INT and CHA, WIS was the dump stat.
Thank you for sharing this useful data! Greatly appreciated.
Amazing work as usual Extra Credits. Your videos are always informative, inspiring and sometimes quite hilarious.
The Extra Histories are always good, but I find myself especially enjoying this series. Good choice!
"The proposal was nearly too ludicrous for anybody who hadn't been generously bribrd to take in." Brilliant guys !
Wow, what are you doing? Are you kidding me! How can you not see the economy collapsing, Blunt! Seriously Blunt, you're mad if you think you can keep money coming out of thin air! You're a madman thinking this will work! Just abandon ship, go to Russia or someplace like that and leave your co-conspirators behind! Do it Blunt, DO IT!!!!
-Me this entire episode.
Just love this series.
I have always enjoyed learning. I was the dork in school that couldn't pick a favorite subject. I loved them all!
But one subject I hated, one that I would totally zone out in, was economics and finance. I don't know; I just find these topics to be dull. However, this series has changed that a bit. This is truly fascinating.
Hey I got some South Seas stock to sell. Any buyers?
I'd have too sell off my apple stock but sure!
Colonel Graff no thanks. I'm in the market for Enron stock though.
KestrelTown Steady on guys, I'm sticking with RBS and Northern Rock. Safe as houses!
If you actually had a decent condition South Sea Company stock certificate, you -could conceivably sell it for thousands to a collector- should sell it to me for $20.
JakesFavorites A grilled cheese sandwich.
You guys are one of my favorite channels on youtube! Your history videos are my favorite videos on all of the platform. Thanks for great videos, and keep it up!
This story aged perfectly. It’s 2023, and no one remembers the lessons.
One of the most entertaining and informative videos ever seen...by me at least. I salute you
I absolutely love this series!!!
Greatest idea ever! :D
Thanks for the recap. I understood what was going on a lot better this episode :)
the funny thing is modern economics are just as ridiculous as this
"The market can remain irrational longer then you can remain solvent."
This is easily one of most interesting things i have heard in history
This just shows how rediculous economics can be. So far I'm really enjoying this series!
I'm really really loving this series.
All i can say is: Small loan of a million pounds.
Except that these guys made a company worth about 300 MILLION Punds(k Pound isn't exactly a US Dollar but It's close). And yeah BTW they made all their cash out of nowhere.
I learn so much from these videos!
Thank you #ExtraHistory!
So you're saying that because of the South Sea Company, I'm stuck with vapors in my brain? D:
I am really enjoying this look at the bubble. Thank you extra credits, this is really interesting history.
Doesn't this sound familiar?
1929 Crisis maybe?
even more familiar. 2007-2008 Financial Crisis
which was a repetition of the 29
yes
No. If you bought stock at that time you still owned a share of the incredibly productive US industry even after the bubble popped. You may have overpaid for it, but the fundamental asset being traded was a fundamentally very valuable one.
When the south sea bubble burst, people were left with _nothing_. Not even a tulip. A better modern metaphor would be bitcoin.
I haven't studied it as I should, but isn't it true that the shares were enormusly undervaulated after the 29 crisis, leaving everybody with nothing to trade for the assets that were held, not even able to sell them since no one was buying?
I love wildly stretching my interpretation of the law! Blunt and I have so much in common.
He sold swords to Britain and then bought Britain to get the swords back
Fun fact: Jules Verne roasts the hell out of England for this in Around the World in 80 Days, when wagers about Foggs wager kicks off a stock market craze.
Image typo: At 1:05 it says 10,000 shares instead of 1,000 shares.
I know this is three years late, but it's not really a typo. They meant 10,000 Pounds _worth_ of shares, not 10,000 shares.
Blunt was a goddamn genius
He built a company larger than the economy of Britain of only hype.
Honestly, if he wasn’t so greedy, he probably could’ve done a far more reserved scale of this, and actually really benefited Britain, which is kind of crazy. Had he reinvested all of the ludicrous profits from stock price rises into keeping the company rich and ready to pay its dividends, and if there was no artificial market manipulation, there’s a solid chance that he could’ve consolidated and paid off most of the debt quite effectively until Britain expanded its shipping rights in the south seas.
English Government: What does south sea company make?
SSC: What do you mean, like, how much money does the company make?
English Government: oh no I mean *what* do you make?
SSC: I don't follow. We make money
English Government: No, I know you make money, I mean what do you create?
SSC: We create wealth.
it's increidble to see how one person can manipulate and make huge changes in a whole country or even the whole world. That makes it increidble and dangerous.
One day they can do a GME follow up
Extra credits has come a long way
That thing where they have stock that don't have to pay for unless they sell it is basically the definition of modern stock options.
Thanks to this series, I love history now. I just bought a book called: "Las legiones malditas" (The cursed legions) from Satiago Posteguillo, a novel about a roman general at the punic wars against Anibal. great book. The south sea company history really interested me into economics.
So how is it we know details this indepth, parliament records, bank of England records and even the South Sea Company must of had records. Even then there is a surprising amount of information, which said records wouldn't of covered.
The amount of money that we are dealing with here is staggering. At the very least, we can use parliamentary records, bank records, and stock records to figure out what was going on. We also have comics and paintings that were made at the time that depict these events in rather hilarious detail.
I still love so hard the FFXI music in the Extra History. Oh, the Dunes
Blunt was so good at hyping up thin air im certain he was reincarnated into our time and invented cryptocurrency
This needs to be a mini-series on PBS or the History Channel.
Oh wait this is basically cryptocurrencies and nfts in the 1700s
throughout this I've just been laughing as everything gets more and more convoluted
So they were increasing the value of their company without actually putting any new money into the system?
Nicolas Leblanc
Yes.
This is why seeing the future is so valuable
You guys make really great videos. Keep them coming =]
One question - do you use trillion as 10^12 (short scale) or 10^18 (long scale)?
Given they're from the US, they're going to use the short scale. So a trillion = 1,000,000,000,000.
Psyched for next week, then. I been waiting to see how this all blows up.
The man played them like a fiddle
Well, bribed them like a fiddle 🤭
gotta wonder how well mister blunt would be doing nowadays, on the one hand, making money off of hype has never been easier, on the other, sceptics have much faster ways of investigating and communicating.
Watch this and The Big Short in sequence, and bring a change of underwear.
And then embrace communism.
This is so effing EXCITIIIING!!!!!
Can't wait until the next episode! :P
Time for another 10 minutes of being completely lost at what they are talking about!
LOVIN IT ANYWAY!
Never thought I'd say "oh hey sweet" to a history lesson.
4:28
Hey, why let seeking revenge get in the way of making a few bucks, Am I Right?
There is a very thin line between ingenuity and madness.
How much money this guys made from promises and thin air? That is crazy. And kind of awesome.
Amazing as always :)
This sounds oddly familiar..
@Milan Ackovski the same could be said for you and me
Question: Government debt was around £8M around 1710 when we first start. 9 years later we're at £31M. How on earth did that turn around?