The lesson: A price detached from use is a rumor, and rumors end at once.
Tulip mania is the first well-documented financial bubble. In the Dutch Republic in 1636 and early 1637, contracts for tulip bulbs, some for bulbs that hadn't even been planted yet, traded at prices that had nothing to do with what a tulip is actually for. In February 1637, those prices collapsed in weeks.
A bulb is worth something because it grows into a flower. That's its use. Once buyers stopped thinking about the flower and started thinking only about the next buyer, the price became a rumor about other people's willingness to pay, and a rumor is not a floor. There was no earnings statement to check it against, no rent roll, no dividend. Just a chain of people betting the chain would hold.
how a price stops meaning anything
The mechanism is simple, and it repeats in every mania since. As long as the next buyer shows up, any price can look validated, because the trade cleared. That's not the same as the price being right. When the chain of buyers breaks, and it always eventually breaks, there's nothing underneath to catch the fall, because the price was never tied to the bulb's actual use to begin with.
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”· Extraordinary Popular Delusions and the Madness of Crowds, 1841
Mackay wrote that two centuries after the fact. It's held up because it names the actual mechanism, the going-mad part happens together and fast, the coming-to-senses part happens alone and slowly.