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Twenty-Five Years: Why the Market Took a Generation to Recover
Audio is available on Spreaker — see link below.
The stock market crashed in 1929 — but it took until 1954 for the Dow to reclaim its peak. This episode dismantles the myth that the New Deal fixed everything, exposing the Fed's fatal contraction, the ten thousand failed banks, and why an entire generation never got their money back.
Audio is available on Spreaker — see link below.
Here's a question that should bother you more than it probably does. The stock market crashed in nineteen twenty-nine.
To understand how far the market had to fall, you need to understand how high it had been lifted, and what was lifting it. Throughout the nineteen twenties, the American stock market became a machine for speculation.
October twenty-fourth, nineteen twenty-nine. Black Thursday.
The crash itself didn't have to become a depression. Markets crash.
Three major waves of banking panics swept the country between nineteen thirty and nineteen thirty-one. By the time the dust settled, roughly ten thousand banks had suspended operations nationwide.
Unemployment reached twenty-five percent. One in four workers had no job.
Franklin Roosevelt took office in March nineteen thirty-three with the banking system on the verge of total collapse. One of his first acts was a bank holiday, closing every bank in the country for several days to stop the panic.
Here's the part that the standard story tends to rush past. The New Deal stabilized things.
Glass-Steagall was repealed in nineteen ninety-nine. Gradually, through the nineteen eighties and nineties, the regulatory architecture built in the nineteen thirties was dismantled or weakened, piece by piece.
American capitalism in nineteen thirty-three was genuinely in question. Not as an abstract philosophical debate, but as a practical matter of whether the system could function without some form of central planning replacing the market.
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