Intelligence Squared

Trump, Markets and The Greatest Crash in U.S. History, with Andrew Ross Sorkin (Part One)

December 1, 2025

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  • The 1929 crash was not a single event but the first domino in a series of policy mistakes that led to the Great Depression, a lesson learned and applied differently in the 2008 crisis. 
  • The euphoria preceding the 1929 crash was fueled by the widespread, newly socially acceptable practice of buying stocks on high margin debt (10-to-1 loans), which made the market fall devastatingly personal for ordinary investors. 
  • Current economic parallels to the 1920s include euphoria driven by technological change (AI replacing radio/automobiles) and the massive expansion of debt, though modern central banks have the ability to print money, unlike in 1929 under the gold standard. 

Segments

Introduction and Guest Background
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(00:00:45)
  • Key Takeaway: Andrew Ross Sorkin’s new book, 1929, analyzes the 1929 financial crash, drawing parallels between that era’s political instability and current market turmoil.
  • Summary: Producer Mia Sorrenti introduces Andrew Ross Sorkin, author of 1929, who discussed the lessons of the 1929 financial crash and its eerie mirroring of today’s political and market instability. The episode is the first part of a two-part conversation. Sorkin spent eight years researching the book, seeking a character-driven, inside-the-room account of the crash.
Audience Poll on Economic Crisis
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(00:04:57)
  • Key Takeaway: A plurality of the live audience (45%) believes a global economic crisis similar to the Great Depression is likely within the next 10 years.
  • Summary: The host polled the audience on the likelihood of a Great Depression-level economic crisis in the next decade, finding 45% thought it likely and 42% unlikely. Sorkin believes a crash is certain, but the resulting outcome (depression vs. recovery) depends on policy choices made afterward.
Researching 1929 Archives
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(00:09:50)
  • Key Takeaway: The difficulty in writing a definitive narrative of 1929 stemmed from the scattered nature of primary source material, exemplified by the lack of personal notes from key figure Charlie Mitchell.
  • Summary: Sorkin was motivated to write the book because existing accounts lacked the character-driven, fly-on-the-wall detail he sought. Accessing the archives of Thomas Lamont at Harvard provided crucial transcripts of conversations with Hoover and Roosevelt, acting as a ’treasure map’ for further research across dozens of locations.
Euphoria and Debt in 1920s
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(00:15:26)
  • Key Takeaway: The speculative fever of the 1920s was powered by the normalization of debt, driven initially by companies like General Motors selling cars on credit.
  • Summary: The 1920s featured euphoria surrounding new technology like radio (RCA), similar to today’s AI excitement. Crucially, debt became socially acceptable after John Rascob of GM began loaning money for car purchases, leading to brokerage houses offering 10-to-1 margin loans to the public.
Cassandra’s Dilemma and Crash Details
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(00:18:35)
  • Key Takeaway: Warning others about the impending crash proved unprofitable, as the market rose significantly after initial warnings, illustrating the difficulty of being a ‘Cassandra’ in bull markets.
  • Summary: Charles Merrill warned clients in early 1928, but the market rose 90% by September 1929, meaning professional optimists outperformed Cassandras over the long run. The 1929 collapse was not a single day event; the market fell about 50% from mid-October to November 13th, but the generational scarring came from investors owing 10 times the value of their equity due to margin loans.
Hoover’s Policy Mistakes
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(00:22:08)
  • Key Takeaway: President Hoover exacerbated the crisis by implementing counterproductive policies, including raising taxes and enacting the Smoot-Hawley tariffs, despite widespread warnings.
  • Summary: Once the crash occurred, President Hoover made several mistaken policy choices, such as raising taxes and pushing corporations to raise wages when they could not afford them. His implementation of the Smoot-Hawley tariffs in 1930, against economist advice, led to a 60% drop in global trade within 12 months.
Fed Inaction and Regulatory Aftermath
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(00:23:22)
  • Key Takeaway: The early Federal Reserve was hesitant to flood the system with money due to concerns about the gold standard and fear that aggressive action would cause the entire ’experiment’ of the Fed to end.
  • Summary: The Fed sat on its hands partly because they feared being blamed for tipping the economy over if they raised rates to curb speculation, and partly because the institution, new in 1913, risked political dissolution. The resulting Glass-Steagall Act, intended to separate commercial and investment banking, was revealed to be driven by corrupt dealing rather than pure progressive motives.
Crash to Depression Transition
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(00:29:27)
  • Key Takeaway: The crash became a depression due to a collapse in confidence, widespread bank failures (9,000 by 1933), and the inability to print money under the gold standard.
  • Summary: The Great Depression saw unemployment peak at 25% in 1932, with tented camps appearing in Central Park. The banking system failed partly because the US was on the gold standard, preventing money printing, and partly because local banks could not merge to absorb losses. The crisis was a result of layers of policy mistakes compounding the initial market shock.
Modern Differences and Leverage Risks
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(00:31:02)
  • Key Takeaway: The primary difference today is the ability to print money, but the major unknown risk lies in the opaque leverage concentrated in private credit markets post-2008.
  • Summary: Unlike 1929, central banks can now flood the system with money, as seen after 2008 and COVID-19, though the national debt complicates this. The current danger is hidden leverage in private credit, which moved off bank balance sheets after 2008 regulations, making its extent and interconnectedness with banks unclear.
Private Credit vs. Public Pop
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(00:34:00)
  • Key Takeaway: A private credit failure might result in a ’long, slow hiss’ (like Japanese deflation) rather than a sudden ‘pop’ because the money is locked up for longer durations, concealing asset values.
  • Summary: Private credit is structured with longer durations, meaning investors cannot call their money back immediately, preventing instant bank-run style panic. This lack of transparency means a crisis could manifest as a slow erosion of confidence and zombie assets, rather than a sharp, visible market collapse.
AI Bubble Concerns
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(00:36:29)
  • Key Takeaway: The AI valuations are concerning because the current math for large language models does not pencil out, and even if the technology succeeds, the resulting productivity gains could destroy consumer demand.
  • Summary: Many in Silicon Valley admit the current math for funding frontier AI models is based more on religious belief than immediate returns. Furthermore, if AI succeeds by creating massive productivity (less cost for more growth), it implies widespread job displacement, raising the question of who will ultimately afford the resulting products.