does current "AI boom" resembles some previous crazy dangerous times?
Amazon.com: 1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation (Audible Audio Edition): Andrew Ross Sorkin, Andrew Ross Sorkin, Penguin Audio: Books
1929 vs 2025: Andrew Ross Sorkin on Crashes, Bubbles & Lessons Learned - YouTube
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AI Summary (by Gemini)
1. The Illusion of Unending Prosperity
The 1920s were defined by a collective delusion of limitless economic growth, fueled by the rise of a consumer economy and the easy availability of credit. Ordinary Americans were drawn into speculative investing through "buying on margin," creating a feedback loop where rising prices encouraged more borrowing and inflated asset values. Despite widening wealth gaps and expert warnings, figures like Charles Mitchell promoted stock ownership as a guaranteed path to wealth, fostering a widespread belief that old economic rules no longer applied and setting the stage for a painful reckoning.
2. The Clash Between Wall Street and the Federal Reserve
A power struggle emerged between the Federal Reserve, which sought to curb dangerous speculation through "moral suasion," and Wall Street leaders who resented the interference. When the Fed attempted to cool the market in early 1929, Charles Mitchell openly defied their authority by injecting $25 million into the call loan market, effectively undermining the central bank's efforts to stabilize the economy. This conflict highlighted a fundamental disagreement over the role of credit, exposing the Fed's limited power to control a runaway market and emboldening unchecked financial behavior.
3. The Power and Peril of Speculation
Speculation transformed from a niche trade into a national obsession, turning figures like William Durant and Jesse Livermore into celebrities who embodied the allure of instant wealth. While Livermore mastered the art of market anticipation through patience and risk management, the era was also characterized by deceptive "stock pools" where wealthy insiders artificially inflated prices to trap the public. This environment created a landscape where ethical ambiguities thrived, and the immense influence of individual speculators and manipulative schemes often overshadowed fair market principles.
4. The Political Weaponization of Finance
The line between finance and politics blurred as industrialist John Raskob leveraged his wealth to champion Al Smith’s presidential bid and promote the democratization of stock ownership. Raskob envisioned a system where ordinary citizens built wealth through debt-financed investing, normalizing market participation during a speculative bubble. Following Smith’s defeat, Raskob weaponized his resources against President Hoover, funding a covert smear campaign that demonstrated how personal fortunes were being deployed to manipulate public perception and wage ideological warfare.
5. The "White Knight" and the Bankers' Illusion of Control
When the market plunged into chaos on Black Thursday, Wall Street looked to its titans to replicate the legendary rescue of the 1907 panic. A coalition of bankers, led by J.P. Morgan & Co., pledged millions to stabilize prices, with Richard Whitney making a theatrical bid for U.S. Steel that provided a fleeting moment of relief. However, this intervention proved futile against the overwhelming volume of sell orders, revealing that the market’s fragility and speculative excess had grown beyond the control of even the most powerful financiers.
6. The Personal Cost of the Crash
The crash inflicted widespread devastation, erasing life savings and shattering the reputations of once-revered financial leaders. The psychological toll was immense, leading to suicides among the elite, such as banker James Riordan, and leaving figures like Winston Churchill and Charles Mitchell facing financial ruin. Beyond individual tragedies, the collapse eroded public trust in institutions, replacing the image of infallible bankers with one of greed and recklessness, fueling the despair that would define the Great Depression.
7. Hoover's Misguided Laissez-Faire and Roosevelt's Assertive New Deal
President Hoover initially viewed the crash as a psychological issue and adhered to a laissez-faire philosophy, resulting in ineffective interventions that failed to stem the economic bleeding. In stark contrast, Franklin D. Roosevelt assumed office with a promise of bold, assertive action, immediately declaring a bank holiday and abandoning the gold standard. Roosevelt’s willingness to challenge economic dogma and communicate directly with the public through "fireside chats" restored a sense of hope, marking a profound shift toward active government involvement in the economy.
8. The Pecora Hearings and the Demand for Accountability
Deepening public anger led to the Pecora Commission, where prosecutor Ferdinand Pecora ruthlessly exposed the unethical practices of Wall Street’s elite. The hearings revealed shocking details, such as Charles Mitchell’s tax avoidance schemes and the fact that J.P. Morgan partners paid no income taxes during the early Depression years. These revelations dismantled the myth of the benevolent banker, turning figures like Mitchell into public scapegoats and fueling the political momentum necessary for sweeping financial regulations.
9. The Enduring Legacy of Glass-Steagall
The Glass-Steagall Act of 1933 emerged as a landmark reform, designed to curb speculative excesses by mandating the separation of commercial and investment banking. Born from political compromise and the revelations of the Pecora hearings, the legislation also established federal deposit insurance (FDIC) to restore faith in the banking system. Although eventually repealed decades later, the act symbolized a decisive victory for federal authority over Wall Street, creating a structural framework that provided financial stability for generations.
10. Human Nature: The Unchanging Constant
Ultimately, the story of the 1929 crash serves as a testament to the cyclical nature of human folly and the recurring belief that good times can last forever. Despite the trauma of the Great Depression, the tendency to dismiss caution and "dress up hope as certainty" remains a constant human trait. The enduring lesson is not that crises can be fully prevented, but that humility is essential, as no generation is immune to the allure of irrational exuberance or the inevitable consequences of forgetting the past.
