Andrew Ross Sorkin’s approach to the Great Depression is to follow some great men, day by day in the year leading up to the crash. What arises most clearly is the avarice of bankers and financial giants, who, though aware they were inflating a bubble, continued to lean on the Federal Reserve Board to allow the continual flow of inexpensive (low interest) cash. Absorbing all the cash they could hoard, bankers, who at the time could also sell securities, loaned money to vast numbers of average citizens, encouraging them to invest in the stock market.
The market had risen steadily during the 1920s so the appeal, coming as it did from wealthy tycoons and salesmen making commission, was irresistible. With a loan from a bank, an investor could purchase stock for two-fifths of its value, using the invested money as collateral. As long as stock values continued to rise, the gained income could be used to pay off the difference. When, in the fall of 1929, stock prices fell quickly, banks called upon their customers to repay their borrowed money to cover their losses in bank values. Money they did not have. At the same time, customers, worried about their rapidly declining valuations rushed their banks to take out their savings. Hundreds of banks collapsed along with the market. What Sorkin makes clear is that the 2008 economic crash was a repeat of 1929, and that the current tech bubble, again driven by the moneyed classes and Trump’s urging the Fed to obey his wishes looks awfully familiar.