Are We Doing This Again? Andrew Ross Sorkin on “1929” and the GoodFellows on 2025

Quick Overview

Andrew Ross Sorkin argues that the 1929 market crash was a misunderstood financial disaster, where policy choices following the initial crash, rather than the crash itself, caused the Great Depression, a parallel he sees in current market dynamics involving leverage and technological shifts like AI mirroring the 1920s radio mania.

Key Points: The greatest misunderstanding of the 1929 crash is the myth that it happened in one day and magically caused the Great Depression; Sorkin asserts the crash was the first of several dominoes, with subsequent policy choices leading to the depression. Sorkin finds strong parallels between the 1920s, characterized by the democratization of finance and the technological boom around radio (the 'Nvidia of its time'), and today's environment with AI as the backdrop and efforts to democratize finance. A key technological factor in 1929 was the physical plumbing issue: stock prices on the ticker tape were often 3, 4, or 5 hours behind, causing indiscriminate selling as people could not ascertain the actual price. John Cochran noted that by the end of 1929, the stock market was only down 17%, but the downdraft between September and November 13th was about 50%, leading people leveraged 10-to-1 to sell homes and mortgage houses. The panelists agreed that policy mistakes in the wake of the crash, such as the Fed failing as lender of last resort and banking regulations preventing small bank recapitalization, caused the Great Depression, not the stock market crash alone. Sorkin reveals that the Glass-Steagall Act, often credited to Senator Carter Glass, had half its bill written by a banker trying to disadvantage another banker, illustrating historical crony capitalism. If the market drastically declines in 2026 under a Republican President and Congress, Sorkin predicts Democrats win the House, leading to gridlock, which he suggests the market would like.

Context: The Hoover Institution's 'Goodfellows' broadcast, featuring historian Sir Neil Ferguson, economist John Cochran, and former National Security Advisor HR McMaster, hosted financial journalist Andrew Ross Sorkin to discuss his book "1929: Inside the Greatest Crash of Wall Street History." The conversation centered on re-examining the causes and consequences of the 1929 market crash and drawing parallels to contemporary economic conditions, particularly concerning leverage, technology manias, and the role of policy responses.