Dutch interest rates 1540 – present

No country in the world has maintained, on average, a lower interest rate than the Netherlands since 1540. A look at our interest rate graph from 1540 onwards shows that, with the exception of two major spikes, the Dutch interest rate tends towards a kind of natural average of 4 to 5%. There are good explanations for these two outliers. The first one, roughly between 1550 to 1600 coincides with the Eighty Years War. During this period, significant funds were required to finance the war and the bourgeoisie was even obliged to lend money to the government. By the end of the sixteenth century, the national debt had increased tenfold and a record interest rate of 17% was recorded. Subsequently, a sharp decline ensued as hostilities diminished in intensity, and a truce was reached in the early 17th century. This drop in interest rates—from 17% to 4%—played a crucial role in the explosive growth of the Dutch Republic during the Golden Age of the 17th century. The second spike in interest rates, after the Second World War, is again due to deteriorating government finances. Not war, but employment is now the ultimate goal of the government, leading to irresponsible borrowing and spending on a massive scale—what monetary connoisseurs might term 'naive Keynesianism.' At one point, a Dutch government bond was issued with a coupon rate of 12¾%! On Sunday, August 15, 1971, President Nixon announced a pivotal economic shift: the decoupling of the dollar from the gold standard—a turning point with worldwide ramifications still visible today. For the first time in history, it is possible worldwide to print money without limitations. In the 1980s, Fed chairman Paul Volcker in the U.S. and the unsurpassed Dutch Central Bank president Jelle Zijlstra successfully argued against the deteriorating state finances. It was during this time that stringent austerity measures were implemented, resulting in a spectacular decline in interest rates—from 12¾% to below zero just before the pandemic. This fuelled another phase of explosive growth, particularly over the last decades.

Dutch shares 1602 - present

1602 – 1720: first ascending phase

With the introduction of the Dutch East India Company (VOC) share in 1602—the world's first stock—the Amsterdam Stock Exchange and global equity trading were born. Between 1602 and 1720, investing in shares proved highly lucrative, with prices increasing sixteenfold overall. However, this period was not without turmoil. In the year 1672, known among the Dutch population as ‘the disaster year’, the Netherlands was besieged by England, France and the German prince-bishops of Münster and Cologne. The government was desperate, the people distraught, the country chaotic and ... investors speechless. The stock market collapsed by 53% in a few days. Fortunately, the attackers withdrew, and VOC shares soared to unprecedented heights between 1700 and 1720.

1720–1795: The First Bear Market

It started in Paris, on a warm summer day in 1720, when some investors, against prevailing sentiment, started selling their shares in the Mississippi Company, whose prices had reached dizzying heights. Panic ensued, spreading to London, where shares plummeted, and finally to Amsterdam by the end of the summer, resulting in a market collapse. Unlike earlier recoveries, no significant rebound followed, marking the start of the first bear market, which persisted until 1795. In the end, it was not until 1960 (!) that the peak of 1720 was reached again.

1795 – 1920: second ascending phase

With the invasion of the French in 1795, the market initially plunged to the lows of 1782, at the time of the Fourth Anglo-Dutch War. However, shares staged a remarkable recovery later that year. We entered a second upward phase which lasted until 1920. It proved to be a gradual and long-term increase with a number of small corrections such as during the conflict with England in 1803, the political crisis in France in 1848, or the Crimean War (1853–1856). The era was defined by the transformative effects of the Industrial Revolution. The Amsterdam exchange diversified, apart from trading companies, banks, and insurers, there were also industrial stocks and American and Russian railway companies.

1920–1932: The Second Bear Market

The second bull market ended abruptly in 1920 as global stocks entered a free fall. In Amsterdam, prices dropped by 30% across the board. The post-World War I economic euphoria was shattered, and hundreds of Dutch companies went bankrupt. While the market recovered modestly by the end of 1920, corporate profitability remained lackluster throughout the 1920s. Then, in 1929, Wall Street crashed, and the Amsterdam exchange followed suit with a 20% decline. The worst was yet to come, with additional declines of 27%, 30%, and 34% in 1930, 1931, and 1932, respectively. By the end of this period, the value of investments had plummeted by 80%, returning the market to levels last seen in 1630.

1932–2009: The Third Bull Market

From 1932, the market began a slow but steady recovery. Misery, unlike euphoria, often ends inconspicuously with a gradual upward trend. In hindsight, it is clear that 1932 marked the end of the second bear market and the start of the third bull market. This upward trajectory, interrupted only by World War II and the turbulent 1970s, lasted until 2000. Events like the Korean and Vietnam wars, the OPEC crises, and the crashes of 1987 and 1989 barely dampened the enthusiasm of optimistic investors.

2000–2009: The Third Bear Market

In 2000, the AEX index peaked at 701.56. A year later, the bubble burst, with global markets losing substantial value. Dutch companies like World Online and Newconomy became symbols of investor exuberance. While the AEX recovered to around 550 points by mid- 2007, the financial crisis of 2008 erased 52.2% of its value, while the S&P 500 fell by 39%.

2009–Present: The Fourth Bull Market

From 2009 onwards, markets rebounded significantly, buoyed by low interest rates that served as a key driver of growth. While the pandemic caused a temporary correction, the upward trend resumed, albeit with significant volatility. By late 2024, Donald Trump's election and the republican majority in Congress injected fresh momentum into both the stock market and the dollar.