1929 vs 2025: Andrew Ross Sorkin on Crashes, Bubbles & Lessons Learned
Episode Details
In an All-In Podcast episode, hosts Chamath Palihapitiya and David Friedberg interview author Andrew Ross Sorkin about his new book, 1929: Inside the Greatest Crash in Wall Street History--and How It Shattered a Nation. Sorkin explains that the setup for the Stock Market Crash of 1929 involved several key factors. A major shift began around 1919 when organizations like General Motors pioneered Consumer Credit, changing the American aversion to debt. This led to a massive expansion of Leverage, with banks like National City, run by the charismatic Charlie Mitchell, lending speculators up to $10 for every $1 they invested. This period was marked by a complete Lack of Regulation, with no SEC to prevent insider trading and manipulation, fueling the speculative bubble. The boom was also driven by a new transformative technology, the Radio, with companies like RCA becoming the equivalent of today's Nvidia. This technology amplified a Social Contagion for investing and the idea of Democratization of Finance, where the American Dream shifted towards getting rich quick. Opposing this trend was Senator Carter Glass, who railed against 'mitchellism' and was a key figure behind the eventual Glass-Steagall Act. The crash ultimately triggered the Great Depression, leading to the election of Franklin D. Roosevelt and the implementation of the New Deal. Sorkin notes that policy mistakes by his predecessor, Herbert Hoover, such as enacting Tariffs, exacerbated the downturn. The discussion draws strong parallels to the modern era, questioning if the massive investment in AI (Artificial Intelligence) constitutes a similar Monetary Bubble. The hosts explore where hidden Leverage might exist today, pointing to the Private Credit market. They also touch upon the potential for AI-driven unemployment mirroring the high rates of the Great Depression and debate the role of Speculation as the necessary 'twin of Innovation'. The conversation concludes by reflecting on the cyclical nature of markets, often driven by the unchanging Human Condition—the desire for more—and whether modern regulations are sufficient to prevent a similar catastrophe, while also considering current debates on Fiscal Policy and the use of Tariffs for National Security.
Key Topics & People
The global superpower whose foreign and domestic policies are the focus of the interview.
The podcast hosting the interview with Senator John Fetterman.
Co-host of the All-In Podcast who interviewed Senator John Fetterman on various political and economic topics.
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The economic system the 'Trump Accounts' program is designed to bolster by creating a nation of owners and giving more people a stake in the market's upside.
The central bank of the United States, central to a discussion about Donald Trump's nomination of Kevin Warsh as its new chair and the future direction of monetary policy.
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Co-host of the All-In Podcast participating in the capital markets discussion.
Artificial Intelligence, viewed as a disruptive technological force capable of massive automation and shifts in global competition.
A massive historical financial collapse cited by Dalio as a parallel to modern debt dynamics.
Former US President referenced regarding the last time the Supreme Court struck down such sweeping executive policy.
Major automotive company favored by the Biden Administration over Tesla in EV market discussions.
The introduction of new technologies and methodologies, desperately needed in US defense to remain competitive.
A financial journalist who was shown in a clip expressing disbelief and laughing at the ambition of Elon Musk's 2018 compensation plan, highlighting how unlikely its success was perceived at the time.
The primary justification for the proposed TikTok ban, centered on the risk of the CCP accessing American user data or manipulating content to influence public opinion.
A term representing the financial industry. Bessent notes that Wall Street has responded very positively to the administration's first-year policies, with portfolios surging.
A severe worldwide economic crisis. Molly Bloom notes the surreal experience of running a poker game with $10 million on the table in New York City while the President was on TV addressing the nation about the economic collapse.
The potential for artificial intelligence to cause widespread job loss, drawing a parallel to the 25% unemployment rate seen during the Great Depression following the 1929 crash.
A type of economic bubble characterized by rapid escalation of market value, particularly in the price of assets, caused by an excessive supply of money in an economy. The podcast questions if the current market is in a monetary, inflationary, or speculative bubble.
The use of government spending and taxation to influence the economy. The discussion touches upon current government spending levels as a potential source of economic instability.
The characteristics, key events, and situations which compose the essentials of human existence, such as birth, growth, emotion, aspiration, conflict, and mortality. In this context, it refers to the perpetual human desire for 'more,' which drives market frenzies and speculation regardless of regulations.
Lending to companies or individuals by non-bank institutions. It is mentioned as a modern area where significant, potentially unmeasured, leverage exists in the financial system.
The spread of behaviors, attitudes, and affect through crowds and other forms of social aggregates. In the 1920s, a social contagion around wealth creation fueled the stock market bubble, amplified by new media like radio.
The acting head of J.P. Morgan & Co. during the 1929 crash. Sorkin discovered transcripts of his phone calls with Hoover and Roosevelt in the archives at Harvard's Baker Library.
The 31st U.S. President, in office during the 1929 crash. His administration's response, including raising taxes and enacting the Smoot-Hawley Tariff, is often cited as worsening the subsequent depression.
An executive at General Motors and a prominent entrepreneur of the 1920s, described as the 'Elon Musk of his era'. He advocated for the 'ordinary investor' and attempted to create an early version of a mutual fund.
A severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States after the Stock Market Crash of 1929.
Legislation passed in the aftermath of the 1929 crash that separated commercial banking from investment banking. Sorkin reveals its origins were driven by business lobbying as much as by consumer protection.
A defining characteristic of the 1920s financial markets, with no SEC, no prospectuses, and no rules against insider trading or market manipulation, which allowed the speculative bubble to grow unchecked.
Personal debt taken on to purchase goods and services. The concept became widespread in America starting in 1919 with General Motors' program for car loans, fundamentally changing American attitudes towards borrowing.
A bank run by Charlie Mitchell that aggressively expanded into lending for stock purchases, becoming a symbol of the 1920s financial boom. It later became part of Citigroup.
The idea of making financial markets and services accessible to the general public, not just the wealthy elite. This was a major theme in the 1920s and is echoed in modern discussions around retail investing and crypto.
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The act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay, in expectation of a substantial gain. Sorkin argues it is the 'twin of innovation'.
The head of National City bank (which became Citigroup) during the 1920s. He was a major proponent of democratizing finance and lending money to the public to buy stocks on margin.
A book by Andrew Ross Sorkin that provides a character-driven narrative of the events and people involved in the Stock Market Crash of 1929.
A US Senator who was a vocal critic of the speculation and financial practices of the 1920s, which he termed 'mitchellism'. He was a key figure behind the Glass-Steagall Act.
The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society in which upward mobility is possible for everyone. It is discussed as having shifted from a 'Horatio Alger' story to a 'lottery' mentality in the 1920s.