The process is in many ways a random event, like the mutation in a microbe
such as a bacterium or virus. A celebrity, for example, may offhandedly voice a
colorful phrase. That is what happened on October 15, 1929, two weeks before
the 1929 crash, when the famous Professor Irving Fisher of Yale, in a speech
before the Purchasing Agents Association of New York, said that the US stock
market had reached a “permanently high plateau.” The newspapers picked up
that new, colorful phrase over the next couple of days.6 That spectacularly ill-
timed and ironic phrase became an epidemic, probably affecting the duration of
the market debacle, and it is still widely remembered today. In fact, those three
words are more famous today than the title of any of the books that Fisher spent
years writing. They are in the same league with other colorful phrases such as
irrational exuberance and Laffer curve. These words and their effects came from
outside the economy, and they are therefore exogenous.
Also, anniversaries of past events can resurrect economic narratives. Even
though a narrative of years past—such as the 1987 stock market crash—has lost
its contagion, it may still exist in the dim recesses of memory, for older people at
least. But it has the potential to become contagious again, if it is tweaked (and
probably renamed) and reattached to a human-interest story. For example, the
news media tend to remind the public about the 1987 crash on major
anniversaries, and they will predictably continue to do so until there is a bigger
one-day crash. At that point, 1987 will no longer be the record-holder, at which
time it won’t be of any interest at all.
By 2013, the Bitcoin narrative was beginning to fade. It was an old story, and
the price of a Bitcoin dropped from over US $1000 at its 2013 peak to just over
$200. But a proliferation of new inventions—or mutations—kept the idea alive.
Notable among these inventions was the initial coin offering (ICO), which
allowed new cryptocurrencies to be developed with distinctively different
stories. These currencies were backed, in effect, as shares of corporations. The
ICO brought a flood of new narratives, each tied to a particular coin identified
with some line of business. It brought back into public esteem the old sport of
picking stocks, which had become somewhat tarnished as a fool’s errand. There
was something new to talk about. In 2017 alone, there were over nine hundred
initial coin offerings for crowdfunded business startups that wanted to raise
money for some new venture. Almost half of them failed within a year, but new
ICOs kept coming.7
Of course, economists are aware of the narratives associated with events, but

mostly they work on the assumption that the narratives are nothing more than a
bit of silliness that follows the discovery of changing real news about deep
economic forces. The presumption is often that these deep economic forces are
caused exclusively by scientific advances in production, discovery or unexpected
exhaustion of natural resources, demographic changes, or economic research that
provides new information on how government policymakers can adopt better
rules of action. But this mode of thinking misses what may be the essential
elements that cause change in the economy. As we saw in part I, the economic
narratives surrounding these events work in predictable ways: they are
contagious, they suggest scripts for people to follow, they repeat their messages,
and they thrive on human interest. In doing so, they affect society and the course
of economic activity in highly consequential ways.