1929: Inside the Greatest Crash in Wall Street History
nybooks.com
nybooks.com
https://www.goodreads.com/book/show/6601224-the-great-depres...
It's remarkable about what assumptions people can make without talking to people from other places.
It looks like you can borrow it from archive.org, but I suggest buying a physical copy. It was printed in 1941 - and I don't believe ever had a second edition - so it's on thin, wartime paper, which adds to the experience of reading it. It's like something pulled out of a time-capsule, a tangible relic of the time it covers.
A nice example of the power of media to bring something to life in the reader.
(haven’t read it yet so I can’t vouch for it)
In 2026, the POTUS, his family and friends are looting the treasury with brazen acts of fraud. The government is buying losing futures contracts to manipulate oil and other markets, and “mysterious people” are buying securities before scheduled, secret events to profit from it.
The US assassinated the leaders of a hostile power after they essentially gave in to our demands.
We eliminated the governments experts in a variety of strategic topics including oil, and installed toadies to run the fiscal service that disburses government funds.
People are working on undermining the FDIC and decapitating social security.
So a crash now is really disturbing. Nobody can have the level of confidence in the faith and credit of the United States as we did in 2008. The people who understand the complex issues have been purged by the government, and the rest of the leadership is complicit in criminality and is counting on loyalty to secure pardons for later. So you should be anxious.
Proof?
https://fortune.com/2026/03/24/paul-krugman-treason-oil-futu...
And those people are linked to the US President.
In what sense was the GFC worse?
That's the evil thing about economic crises. People with enough capital usually can sit them out and often even benefit. People with less capital often lose everything and when the recovery comes, they have nothing that could benefit from it.
I am close to retirement and I often think how quickly your reserves can be wiped out in a long enough crisis.
But it is basically nothing if you get laid off at age 56, and you can't find another job due to age discrimination, your COBRA runs out after 18 months, but you are not 65 years old yet for Medicare . Obamacare may be completely neutered by then, so private health insurance may cost $30k/year for a 57 year-old. You still have a mortgage, you can't afford health insurance, so you take a risk and decide to skip it, because you are healthy. Then you get pancreatic cancer, and without health insurance, your chemotherapy completely depletes your 401k in one year. Then you die of cancer at age 59, because you cannot pay for the treatments anymore.
It would not really be a great depression of there was not mass layoffs and immense job insecurity.
So you are now alone in a foreign country, no family nearby, trying to adapt to a new lifestyle at nearly 60 lol.
Arguably people who got caught in 1970s bear market had it worse.
On the other hand, in 1970s no one got hungry - in 1930s they totally did - but it had very little to do with the stock market, agricultural crisis was because of unexpectedly quick recovery of European crops after WWI and consequential overproduction of US farms (i.e. production that they assumed will be easy to sell to Europe, found itself without market), that precipitated crisis of bad debt, attempts to compensate prices with quantity, even more bad debt as a result, and ecological disaster due to overexploitation of soil - but stock market had nothing to do with it.
So it means it made sense to do it. Even if you correctly predict the economic, political currents, sometimes it is up to the actions of individuals that are very hard to predict.
First, everybody was buying shares on margin. Everybody. Random lower class households were buyings shares on 10:1 margin. They had door-to-door salesmen pushing shares on uneducated households.
Second, nobody was talking about market cap. The whole world revolved around the share prices but nobody seemed to talk about what a company was worth.
Third, there was no SEC. There were no reporting requirements, no quarterly earnings calls. No rules of any kind.
Fourth, knowing prices was very hard. The current price of a stock was shown on physical signs that had to be updated and during heavy trading they were often many hours behind. Absolutely nobody knew what the price of various stocks was during the heat of the moment.
Fifth, the US economy is much more diversified than it was. Back in 1929 it was basically oil, rail, and banks. RCA was the Nvidia of its day.
We're in the middle of a correction now due to Iran, but I don't see a 1929-style crash happening.
What is RobinHood, et al.?
He had told me working with the CCC was not a bed of roses and he saw many terrible accidents to some of the workers. But he was glad it existed.
Also, back then, I believe people were on average stronger and more resilient people alive today. Having such a crash will be far worse for society then 1929.
But you may have misunderstood something I failed to bring across. Most people in in my generation, including me will have just as a bad time as yours should that crash occurs.
The only difference is my generation will only endure it for a much shorter time than yours.
FWIW, I hate everything avocado, but I will miss my bagels with cream cheese and hot chocolate with whole dairy whipped cream on top :)
People step up very quickly once they have to face a difficult situation. A while ago I talked to Ukrainian about their war. He said some years ago he couldn’t have imagined living in a war zone but once it gets started you get used very quickly to drones flying over you, buildings in your town bring blown up, losing power for days, hiding in the basement. It very quickly becomes normality.
You have to have people that can step up: at least in the US, I do not see evidence of that. Not in the White House, not at the SEC, not in Treasury and Commerce.
The most recent cataclysmic event (GFC/2008) at least had smart people around: Bernanke happened to be in charge and he was once of the foremost experts in the Great Depression. Paulson also had notable experience before Treasury. Who do we have now?
It wouldn't be as bad. People will lose their retirement savings but they won't starve. Jobs will be lost, but it's just a matter of time before they're lost anyway to AI.
This is why I have always said every year to not have any "new years resolutions" and instead prepare for 2030. [0]
Sigh. This reviewer, Jacob Weisberg, is sadly either unfamiliar with the basics of major economic theories, or simply didn't connect the dots.
> or why, unlike in 2008, its responses failed so spectacularly.
Keynesian economics, which heavily influenced the 2008 response (fiscal stimulus part) to the financial crisis, didn't exist in useful form until 6 years after 1929. John Maynard Keynes’s book 'The General Theory of Employment, Interest and Money', which is the foundational text of the field, came out in 1936.
Additionally, on the monetary expansion side of things, Bernanke’s 2013 history of U.S. central banking [1] is useful: he says the Fed may have suffered less from lack of leadership than from the lack of an adequate intellectual framework for understanding what was happening, and that the dominant framework in place pushed them toward the wrong conclusions about whether aggressive expansion was needed or legitimate. And so monetary expansion attempts didn't occur until 1931/1932. Quantitative Easing, made famous in 2008, is a refinement on monetary expansion, I think.
[1] https://www.federalreserve.gov/newsevents/speech/bernanke201...
Operationally, central banking had become heavily built around interest rates. In New Keynesian terms, policy works by setting the nominal interest rate relative to the estimated real or natural rate, thereby pushing policy in an inflationary or deflationary direction. But that only works if your estimate of the real rate is roughly correct. In a crisis, when the natural rate is collapsing and financial conditions are tightening rapidly, that framework can become dangerously misleading.
The backward-looking element matters here. In 2008, the Fed put too much weight on lagging inflation indicators, core inflation, and commodity-driven inflation fears when thinking about forward policy. Because of those inflation concerns, it did not cut rates between April 2008 and October 2008, even though the real economy and forward-looking indicators were already signaling serious trouble. Economists like Svensson had already argued for relying more on forecasts and expected inflation rather than backward-looking indicators. Bear Stearns had already happened in March. Yet even around the Lehman collapse, Fed discussion still reflected concern that inflation had been too high and that cutting too aggressively could damage credibility.
So the actual stance of policy was much too tight, and it became tighter in real terms as the economy deteriorated. As expected inflation and nominal spending weakened, a given nominal policy rate translated into a more contractionary real policy stance. That process was self-reinforcing: tight money weakened the economy, the weakening economy worsened expectations, and worsening expectations made the effective stance tighter still.
By late 2008 the Fed had moved close to zero and was beginning to think more seriously about quantitative easing, but it was still not comfortable treating aggressive QE as the main policy instrument. That is where I am very critical of Bernanke. Rather than using monetary policy as aggressively as necessary, he increasingly talked about the limits of monetary policy and the need for fiscal policy to take over. I think that was a major failure of central-bank responsibility. Allowing inflation to turn negative in 2009 while unemployment exploded was not acceptable.
The NGDP numbers make the failure especially obvious. In 2007, NGDP growth was around 5 percent. In 2008 it slowed to around 2 percent, already showing that policy had become too tight. Then in 2009 it fell to roughly negative 2 percent, which is disastrous. Once nominal spending collapses like that, you are no longer dealing only with a housing or banking crisis. You are creating a general recession that hits large parts of the economy that had little direct exposure to housing or finance. That is why technology firms and other businesses far outside housing were also hit so hard: NGDP had fallen massively below trend.
So for me this is fundamentally a case of operational failure. During the Great Moderation, the Fed had become used to relying on gradual, interest-rate-based responses to incoming data. That framework broke down when conditions changed rapidly. Instead of immediately shifting to aggressive balance-sheet expansion and expectation management, the Fed placed too much responsibility on fiscal policy. At that point, older Keynesian themes — the paradox of thrift, the idea that monetary policy becomes ineffective at the zero lower bound, and the need for government demand support — reentered the conversation.
By mid-2008, the Fed should have been much closer to zero and preparing an aggressive, open-ended QE-style program aimed at restoring normal inflation and nominal spending in 2009. A much faster and more aggressive monetary response would likely have reduced the need for large fiscal stimulus and limited the scale of financial rescues. Had they acted that way, this episode might be remembered primarily as the housing and banking crisis, rather than as the Great Recession.
QE1 was enough to stop the collapse from getting even worse, and QE2 and QE3 helped make the United States one of the better post-crisis performers. Even so, the response was still not aggressive enough, especially in 2009. The euro area did much worse and is still paying for it.
What the Fed did not do, even though some monetary economists had argued for it before 2008, was level targeting. The idea is simple: if you fall short of your inflation or nominal-income target for one or two years, you should then aim to return to the pre-crisis trend path rather than simply grow forward from a permanently lower base. That did not happen. Before the crisis, the U.S. had relatively stable NGDP growth of around 5 percent, roughly consistent with 2 to 3 percent real growth plus inflation. Then NGDP fell below trend in 2008 and 2009, and later returned to roughly 4 to 5 percent growth, helped by QE. But ideally, in 2010 and 2011, policy should have aimed for temporarily faster NGDP growth — something like 8 percent — in order to close at least part of the gap back to the old trend.
> he says the Fed may have suffered less from lack of leadership than from the lack of an adequate intellectual framework for understanding what was happening
“It wasn’t leadership, it was the intellectual framework” is a very convenient story for the man who was leading the institution. The basic logic of crisis stabilization — stop nominal collapse, stop deflation, ease aggressively, and use the balance sheet if rates are not enough — was not some unknown mystery in 2008. The failure was operational and intellectual inertia at the top, which is still a leadership failure.
One could argue that we shouldn't have a system where there are a small group of people in control like this, it should be a more automated or at least self correcting system, but train has left the station long ago.
The initial crash was worse in 1987 then in 1929. But in late 80s there was no recession.
So crashes are bad for people who have invested but it looks much more like a bubble in hindsight because of how it turned out. Lots of good companies were also destroyed in Great Depressions, companies, including banks that were mostly sound.
People always focus in the initial crash rather then the actual causes for long run recession. Those are related to monetary and fiscal policy more then anything else.
In the case of the 20s there were a number of very famous economists in the 20s who had warned that structural deflation was happening and that companies need to work together to combat the problem. And this is exactly why this crash turned into such a long term disaster.
So the real worry is not AI bubble but the response to any crash.
https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market...
This one did result in a recession, during which some people who had lived through the Great Depression once again had to live about the same way again, for years, whether you wanted to call it another depression of not.
In 1987 and 2008 those were highly measurable stock drops but mostly concentrated in the stock markets themselves. Without as much consumer exposure, nor the world-destroying ripple effects from more dramatic drops over a longer period of time under conditions that were magnitudes more unstable worldwide.
But my point is exactly, how do you know that 1929 wasn't just like them? My whole point is that what actually matters is what happens after the crash.
1929 was special because of structural issue in the inter-war central banking system, but the right action could still have result in a strong bounce back where by latest 1931 would have been done.
I think what everyone still living can observe is what did actually happen after each crash, using after-the-fact well-curated data having good-to-moderate degrees of provenance.
Going back to 1929, very little first-hand observation from before the crash is still available, and most people at the time didn't understand the implications either. When I was growning up though, my neighborhood was crowded by people from all walks of life who had been through it, before, during, and after. I would say many of their experiences have been unpublished probably because lots of them were "unpublishable."
With 1973, I had already been a teenage stockbroker well before that and I remember it well. The Nixon shitshow had been building for years. Presidential malfeasance can do damage like few other things, even worse when it's a US President which puts the dollar itself at stake.
So my observation is what happens before the crash has more influence on what happens afterward, compared to the steepness of the crash itself.
But if we are discussing economics we need to understand that the link between 'crash' and 'recession' is complex. You can have a country going into recession without a 'crash' and you can have a 'crash' without a recession.
> Beyond the intrinsic difficulty of revivifying the top-hatted dead, Sorkin’s rendition is limited by his desire to frame 1929 as a story about people. His focus on individuals comes at the expense of analysis—particularly of the deeper economic forces that made the crash likely, if not inevitable. Sorkin is more interested in how the crisis felt than why it happened. He has little to say about why the government failed to take any meaningful steps to prevent it—or why, unlike in 2008, its responses failed so spectacularly.
Emphasis added.
The review here seems intent on filling in the gaps it finds the author to have left himself.
This one reads more critically:
"1929: Sorkin Rounds Up the Usual Suspects"
> [...] Sorkin stages morality play rather than history. He also helps set policymakers up for the kind of grand theatrical action they are inclined to take anyhow whenever markets turn down. In other words, another 1933- or 2008-style rescue: flooding the market with liquidity, and stringing up wrongdoers and even the better Wall Streeters, such as the Mitchells whom Sorkin seeks to rehab. The same subpar results are likely to follow.
[...]
> Were 1929 a documentary produced by Michael Moore, its suggestions would not matter. We are accustomed to illogic in television. But 1929 presents itself as the researched book Sorkin wants it to be. It therefore claims the authority that such books can carry.
> Sorkin quotes H. G. Wells, who called human history “a race between education and catastrophe.” Indeed, indeed. But for education to beat catastrophe, that education must be a little more thorough.
https://www.coolidgereview.com/articles/1929-crash-sorkin
[0]: I was returning Stalin: The Glasnost Revelations by Walter Lacquer (1990). I found its research and ensuing narrative worth the effort.
Thank you - this is exactly what I want to learn more about. Placed an order.