1929 vs 2025: Andrew Ross Sorkin on Crashes, Bubbles & Lessons Learned

Andrew Ross Sorkin's new book, '1929,' explores the character-driven history of the 1929 stock market crash and draws parallels to today's financial landscape, highlighting the cyclical nature of human greed and speculation despite regulatory changes.

• The 1929 crash was driven by individual motivations, widespread credit, and minimal regulation, fueling unprecedented speculation.

• Human nature's desire for 'more' consistently drives financial cycles, with modern parallels seen in current speculative bubbles despite regulations.

• Balancing innovation and speculation with effective regulation and managing public expectations for economic prosperity remains a complex, ongoing challenge.

Andrew Ross Sorkin discusses his book '1929,' which delves into the personal stories and motivations behind the stock market crash, contrasting it with the 2008 financial crisis. The book aims to provide a narrative-driven account of the key players and economic conditions of the era, emphasizing how the human element of speculation and the pursuit of 'more' consistently drive financial exuberance across different periods. While acknowledging current regulations, Sorkin suggests that certain economic trends and psychological factors mirror those of 1929, prompting a reflection on lessons learned and the ongoing challenge of balancing innovation with controlled risk.

Motivation for Writing '1929'

• 00:01:33 Andrew Ross Sorkin, author of 'Too Big to Fail,' wrote '1929' because existing historical accounts lacked character-driven narratives, despite widespread knowledge of the crash. He aimed to uncover the personal motivations, decisions, and intricate relationships of the individuals involved, much like 'Den of Thieves' or 'Barbarians at the Gate' illuminate human dynamics in financial events. His research, including discovering transcripts of phone calls between key figures, allowed him to recreate the chaotic environment leading up to the crash.

The Roaring Twenties' Setup

• 00:04:01 The setup to the 1929 crash was marked by a dramatic shift in American financial behavior, beginning around 1919 when General Motors introduced consumer credit, followed by Sears and then banks like National City (now Citigroup) for stock purchases. This led to an era of widespread, unregulated margin lending where individuals could borrow ten dollars for every dollar invested, fueling a go-go market with no SEC or prospectuses. Technological advancements like radio, with RCA as the 'Nvidia of its time,' and a social contagion around democratizing wealth, further propelled this speculative fervor, exacerbated by rampant manipulation and insider trading by individuals and even banks using depositor funds.

Key Figures and Regulation

• 00:19:31 Two central figures in Sorkin's book are Charlie Mitchell, the 'Jamie Dimon' or 'Michael Milken' of his era who ran National City and facilitated widespread credit, and Senator Carter Glass, likened to an 'Elizabeth Warren' of his time, who railed against 'Mitchellism.' Their clash highlighted the Federal Reserve's struggle to curb speculation and ultimately led to the Glass-Steagall Act, which separated commercial and investment banking and established the FDIC. Surprisingly, Glass-Steagall was influenced more by inter-bank lobbying to marginalize large players like JP Morgan than by pure consumer protection, a nuance often overlooked today.

Modern Parallels and Challenges

• 00:32:02 While Sorkin believes current regulations like the SEC provide a different environment than 1929, he sees parallels in today's speculative bubbles, particularly around AI, and the human condition of constantly seeking 'more.' The podcast explores whether the current economic boom is propped up by a few tech giants and questions the impact of massive government spending and the long-term effects of AI on employment and productivity. A core challenge remains convincing the public to accept 'less' in an era of over-promising, leading to potential social unrest, as historically seen in cycles of wealth taxation and civil splits.