Looking at a thirty year horizon, the stock prices of 1929 might not seem like a bubble. Even if an investor bought at the absolute peak, they would have seen a real return of about 6% by 1959. Many of the companies at the time, such as RCA, represented the true future of technology. However, the period between the crash and the end of World War II was a long and painful chasm for those living through it.

The question is what the time horizon is always. And so if you are looking out 30 years, Tyler, you're 100% right. If you're looking at five years or 18 months or two years or even a decade, at least in the context of 1929, you'd look wrong.

Market warnings are often difficult to time correctly. In 1928, Charles Merrill advised people to exit the market. The market then rose another 90% before the eventual crash. This illustrates the challenge of being a skeptic when momentum is high. Figures like Herbert Hoover tried to restore confidence by telling the public the problem was merely psychological. This approach often fails when people feel the reality of high costs or unemployment in their daily lives.

The role of leverage is central to understanding bubbles. While house prices in many parts of the country eventually recovered after 2008, the crash was driven by excessive debt. Leverage allows prices to get ahead of themselves by bringing growth forward. Even if a price is accurate over thirty years, high levels of debt create a liquidity risk that can shatter the economy in the short term.

The 1929 crash and the 2008 financial crisis both demonstrate the destructive power of excessive leverage. In 1929, many investors were leveraged ten to one. When stock prices dropped, banks issued margin calls. This forced people to sell not only their stocks but also their homes. Andrew notes that while the long term prices might eventually be right, the way people afford those prices initially can undermine the whole system during a crisis.

I think today you look at the amount of debt that consumers have taken on, that the government's taken on. It is just wild on a relative basis to what was happening in 1929. But I think some of that individual basis drove so much of what was happening in the economy. It really became almost a generational shock for those ordinary Americans that had played the stock market for the first time and lost.

Tyler observes that the total debt in the 1929 economy was roughly 165 percent of GDP. While this was high for the time, it is lower than debt levels seen in the post-war era. However, the psychological impact on individuals was profound. Andrew shares a story about his grandfather, who witnessed a suicide during the crash while working as a messenger boy. That experience scarred him so deeply that he never bought a single share of stock for the rest of his life. These individual stories shaped how an entire generation approached investing for decades.

In the lead up to the 1929 crash, the Federal Reserve faced a difficult choice regarding interest rates. The Fed was still a young institution, often referred to as an experiment. Its leaders were haunted by a previous attempt to raise rates in 1920 that was blamed for a brief economic downturn. By 1929, officials knew speculation was out of control, but they feared the political consequences of a correction. They believed that to truly stop the speculation, they would have to raise rates so high that they would inevitably crash the entire economy. Lacking the courage to take that risk, they hesitated.

To really tamp speculation down, you have to raise interest rates so much that you by default would tip the economy. And they didn't have the courage to do that.

Managing a crisis involves two phases: prevention on the front end and response on the back end. During the Great Depression, the Fed failed to flood the system with money or move off the gold standard quickly enough. In contrast, Ben Bernanke applied these historical lessons during the 2008 financial crisis. By flooding the system with liquidity, he prevented a total collapse, even though the bailouts were politically controversial. A milder version of the 1920s downturn might have been possible if the United States had implemented deposit insurance earlier and abandoned the gold standard as Sweden did.

The 1920s also marked a profound cultural shift in how Americans viewed money. Before this era, taking on debt was seen as a moral failure. This changed when John Rascob at General Motors began offering loans to help people buy cars. This move transformed debt from a social stigma into a standard part of the American lifestyle. At the same time, the lack of margin requirements allowed people to speculate in the stock market with extreme leverage, often putting down only one dollar for every ten dollars of stock purchased.

Prior to 1919, it was a moral sin for many Americans to take on debt. People didn't do that. You were the dregs of the universe if you were a debt holder. And that really shifted in 1919 when John Rascob, who was running General Motors at the time, wanted more people to buy cars.

The 1933 Glass-Steagall Act is often viewed as a pure piece of financial reform, but its history is much more complex. Research into the origins of the bill shows that it was not just the work of Carter Glass. Instead, parts of the legislation were shaped by a member of the Rockefeller family who owned Chase. This influence was used to undermine their primary competitor, J.P. Morgan. Rather than a simple act of public service, the bill was partly a weapon used in corporate warfare.

The Glass-Steagall Bill was not as pure as I think most people in the public thought it really was. Parts of the bill were ultimately written by effectively a member of the Rockefeller family who owned Chase. And it was done, in large part to shiv J.P. Morgan, its competitor.

The effectiveness of the act is also a subject of debate. Data suggests that the conflict of interest issues the law aimed to solve might have been exaggerated. Furthermore, the act likely would not have prevented the 2008 financial crisis. The first institutions to collapse, like Lehman Brothers and Bear Stearns, were not commercial banks and would not have been restricted by Glass-Steagall anyway. Andrew notes that while the law remains a popular talking point for politicians like Elizabeth Warren, its ability to have stopped the domino effect of 2008 is questionable.

I have never been convinced by the argument that Glass-Steagall somehow saved us. When you go back and look at the banks that failed first in 2008, Lehman Brothers, Bear Stearns, none of them would have come under the Glass-Steagall bill to begin with.

The 1920s were a period of massive architectural growth in New York. The scale and construction of the city's buildings were remarkable. John Raskob stands out as a central figure of that era. He was effectively the Elon Musk of his time. Raskob ran General Motors and later built the Empire State Building. People viewed the Empire State Building as a feat similar to SpaceX today.

John Raskob was the Elon Musk of his time. He ran General Motors and became a super influential investor. He was a philosopher king that everyone listened to at every given moment. He ultimately constructs the Empire State Building, which is probably the equivalent of SpaceX at that time.

Andrew notes that Raskob advocated for a five day workweek in late 1929. This was not about being kind to workers. It was an economic strategy. He believed that if people were free on Saturdays, they would buy more cars and gardening equipment. Raskob also used his massive fortune to influence politics. He ran a secret campaign to damage the reputation of Herbert Hoover. This effort began months before the Great Crash even happened. Much of Hoover's negative legacy today may stem from that funded media campaign.

Despite his massive influence and the famous idea that everyone should be rich, Raskob is largely forgotten today. He tried to democratize finance through early versions of mutual funds. His story serves as a reminder that even the biggest figures of one century can fade from memory in the next.

Andrew would be drawn to the burgeoning mass media scene of 1920s New York. He imagines being obsessed with the emergence of magazines and newspapers as primary tools for transmitting information. The rise of radio would also be a major fascination during this era of early mass media.

Beyond media, Andrew expects he would have participated in the widespread stock trading of the time. Brokerage houses were appearing everywhere, and people treated speculation like a pastime. He wonders if Prohibition contributed to this behavior by driving people away from bars and toward trading desks.

I imagine I would have gotten caught up in the pastime of stock trading. All these brokerage houses are just emerging everywhere and people are going to play them as if it is a pastime. I always wonder whether Prohibition played a role in why so many people were speculating. Because instead of drinking, what did they do? They traded.

Business leaders from the 1920s are shockingly similar to those of today. Andrew finds that historical figures like John Raskob feel like modern characters such as Elon Musk. Charlie Mitchell of National City mirrors a modern leader like Jensen Huang or Jamie Dimon. These individuals are driven by the same fundamental motivations: insecurity, a fear of missing out, and a desire to fill a void. Money serves as the primary metric for their success, but the underlying psychological drive remains constant across a century.

I actually think they're very similar. I actually think they're shockingly similar. I mean, here I am saying that John Raskob feels like Elon Musk. I think that so many of these individuals feel like modern day characters. I think they're still driven by the same things, which is, at some level I've always thought that people are driven by an insecurity, a fomo, a YOLO kind of hole that they're all trying to fill.

Philanthropy in the 1920s looked different because many of the era's titans were considered new money. They had not yet turned toward major giving before the Great Depression wiped out their fortunes. While figures like Rockefeller and Carnegie set high bars, many 1920s leaders were still in the accumulation phase. Today, modern leaders have different approaches to giving. Bill Gates follows a traditional philanthropic model. Others like Jeff Bezos and Elon Musk view their commercial ventures, such as space exploration, as their primary contribution to humanity. They see these projects as ways to help the species, even if the public perception of their motives varies.

The American banking system historically banned interstate branch banking, leading to a landscape filled with many small, local institutions. This structure differs significantly from the Canadian model, which consists of fewer, larger banks that proved more resilient during the Great Depression. Consolidating most American banks to mirror the Canadian system could reduce systemic risks that local banking at scale presents. While local banks are often praised for serving their communities, the risks they pose to the overall system might be unnecessary.

I think it is slightly insane that we have allowed local banking to happen at the sort of scale that we do because I do think it presents a risk to the system that's likely unnecessary.

Consolidation has already accelerated since 2009. The too big to fail doctrine has naturally pushed deposits toward the four largest banks. Very few new banks have been established in recent years. Recent failures like Silicon Valley Bank and Signature Bank highlight the dangers of smaller institutions operating without sufficient backstops. If a move toward even more consolidation occurred, it would likely require regulations forcing these large entities to serve underserved communities and provide loans they might otherwise find economically irrational.

I think that you look at Silicon Valley bank as a good example, or Signature bank is a good example of what happens in an environment where you have sort of smaller banks doing things that aren't necessarily the right things without the sort of backstop that you'd prefer.

The lending market in America has become increasingly bifurcated since the 2008 financial crisis. Private credit has exploded, creating a shadow banking system where companies seek credit outside of traditional banks. While formal banks only account for about 20% of lending, the remaining 80% falls under different regulatory structures that lack core protections like FDIC insurance. Increasing capital requirements on traditional banks often pushes more activity into this less regulated space. Tyler expresses concern that the banking system is shrinking and there is no clear plan for what to do if this shadow system faces a crisis.

I don't think I know how to solve it. So formal banks are about 20% of lending. So 80% is other stuff. It's not really. It's regulated in other ways, but it's not protected by what we would consider our core regulatory structures. And the more you impose capital requirements on banks... you just make that smaller.

Andrew notes the potential danger of how connected these private credit funds are to traditional banks through liquidity lines and leverage. While private credit may have a better duration match than banks because loans cannot be called daily, a systemic failure would be catastrophic. The conversation moves to the idea of narrow banks, which would be backed 100% by high quality assets like T bills. However, this shift could cause credit to dry up at the local level. Credit is the lifeblood of the system, and some level of speculation is necessary to drive innovation.

Stablecoins present a similar dilemma. If they are required to be backed entirely by Treasuries, they pull those assets out of the market, potentially reducing available credit. Andrew suggests that strict backing requirements for stablecoins are likely an initial step to establish safety and trust, but these standards might loosen over time as the market matures. Ultimately, financial engineering can only do so much to mitigate the intrinsic risks of the real economy.

The real economy is intrinsically risky for obvious reasons, and financial engineering can only make it so much safer. I mean, that's the ultimate dilemma. And it seems to me, new deal banking regulation is finally truly obsolete and we just don't know what to replace it with.

The conversation focuses on the trend of opening private credit and venture capital funds to retail investors. Andrew notes that these funds often lack the disclosures typical of public companies. Tyler argues that these disclosures are not always valuable to the average investor. He suggests that if society allows sports gambling and volatile crypto trading, it is inconsistent to block access to private funds based on obscure SEC rules.

I don't consider the disclosures to be worth very much at all. I have some faith in diversifying. But to throw darts and diversify, you'll do almost as well as you can do any other way.

Andrew shares his experience with the 2020 SPAC boom. He tried to warn people about the risks and fees involved in those blank check companies. Many investors reacted defensively. They saw his warnings as paternalistic or as a way to protect the establishment from regular people trying to get rich. To many, these financial products are like lottery tickets. They offer a chance to dream even if the odds of winning are low.

Andrew, stop trying to protect me, I want to buy the lottery ticket. And by the way, you're not protecting me. You're protecting the man by saying these things.

Instead of relying on more government regulation, Tyler suggests fostering stronger social norms. Anything new in finance should be treated as gambling. People should assume they are using money they are willing to lose. He argues that extending disclosure laws does not necessarily make the economy safer. He also points out that government officials are not inherently better at managing risk than individuals.

If you think people are bad at risk, our government is terrible at risk.

The discussion also touches on historical shifts in accountability. After the 1929 market crash, many people blamed themselves for their financial losses. Andrew notes that today there is much more finger-pointing and a tendency to blame external institutions. Finally, they discuss the independence of the Federal Reserve. Andrew suggests the Fed has always been conscious of political implications, though leaders like Ben Bernanke showed courage by making unpopular decisions during the 2008 crisis.

During major crises like the financial crash or COVID, the Federal Reserve and the Treasury Department naturally work together. Tyler notes that because these decisions are often made jointly, some of the concern over central bank independence might be misplaced. While presidential pressure is a valid concern, the reality is that the Fed and the executive branch are already deeply linked during emergencies.

I agree with much of what was done, but keep in mind, they're always sitting down with the Treasury Secretary. These decisions are made jointly, which I would say is inevitable. Not a complaint I have, but once you see that, you see the same during COVID.

Andrew points out a newer concern regarding the politicization of the Fed. He highlights how Donald Trump has spoken about having a political majority on the Federal Reserve as if it were the Supreme Court. This approach could lead to a long-term shift where partisan politics dictate economic policy for decades. However, Tyler argues that the primary issue is not just political influence but the massive scale of the national debt.

I just think the fiscal position, which ultimately, at least in theory, is the responsibility of Congress, is the actual villain here.

With the national debt approaching 38 trillion dollars, some amount of inflation might be an inevitable way to manage the burden. While political meddling is problematic, the underlying fiscal situation created by Congress remains the most significant challenge. Both Tyler and Andrew agree that there is currently little optimism for getting the country's financial house in order.

Andrew attributes much of his early success to a sense of youthful naivete. At fifteen, he started a sports magazine, which led the New York Times to write a small feature about him a year later. This experience made him believe anything was possible. He spent his eighteenth year calling a specific reporter he admired, hoping for a chance to work for him. While others told him it would never work, he eventually managed to get inside the building.

A little bit of naivete when you're young, I think actually can go very, very far. I had started a sports magazine when I was 15 years old, and that actually led the New York Times, interestingly, to write a little tiny article about me when I was 16. And I thought anything was possible back then.

His first writing assignment at the Times happened by accident. He had expected to spend his time doing administrative tasks like making copies and getting coffee. However, an editor overheard him discussing the internet in 1995. At the time, terms like modem still required a definition in articles. Because Andrew was wearing a suit and tie, the editor assumed he was a regular staff member and assigned him a story. He decided not to reveal his age or actual role and simply wrote the piece.

Andrew attributes his ability to manage vast amounts of news to a natural sense of curiosity. He admits to being addicted to platforms like X, which he uses to follow a wide variety of people. His daily routine involves reading the Wall Street Journal, Financial Times, and the Drudge Report, along with academic papers.

I was born curious. I am addicted, probably to my great detriment, to X, formerly Twitter. I follow all sorts of people. I read the Wall Street Journal and the Financial Times and Business Insider, and I go to the Drudge Report. I am just constantly trying to absorb things.

While individual consumption is part of it, Andrew also relies on collaborative systems. At DealBook, he and his team spend their time in a Slack channel, constantly sharing new ideas and articles. He also works with a team of producers at Squawkbox. This combination of personal habit and professional support allows him to stay on top of the financial world.

Andrew finds himself less engaged with chat groups than he would like. Despite invitations to interesting WhatsApp groups, his focus on finishing a book has kept him from participating fully. He acknowledges the value of these digital communities but has not yet made them a central part of his routine.

Travel presents a different challenge. Andrew's professional commitment to a television show in New York limits his spontaneity. Because he needs to be on set most days, he cannot easily fly to a place like Japan on short notice. He still makes international trips throughout the year, but these journeys require careful planning months in advance.

The one real conundrum of my existence is that I am not as spontaneous as I wish I could be because of the TV show and really feeling like I need to be in New York on the set. Most days it's hard for me just to say, I'm going to go to Japan for a week.

Tyler asks Andrew about his level of fame and whether being recognized frequently is optimal. Andrew expresses that he is still unsure about the real benefit of fame. He feels a genuine sense of joy when people share that they enjoyed his work. Whether it is a book, an article, or the show Billions, he finds it rewarding to see others happy. However, public recognition has its limits. It becomes uncomfortable when he is out with his family or at the gym.

I love that joy that I get from them having that joy. I find it more awkward when I'm having dinner with my family and somebody comes up and wants to take a selfie or if you're ever at the gym.

Andrew reflects on his own experiences as a fan. When he sees someone he admires, he understands the impulse to approach them. This perspective drives him to ensure fans have a good experience. He tries to make sure they have a great moment, even if the situation feels awkward for him personally.

I see them in a restaurant myself or I see them at the airport and I look at them or want to go over to them. And I always don't want that experience to be awkward for the other person, even if it's awkward for me. So I feel like I then have to try to make sure that they have a great moment if they can.

Andrew reflects on his experience co-creating the show Billions with Brian Koppelman and Dave Levine. The scale of TV production is comparable to a massive circus that is built over several months. It involves hundreds of people working on scripts, acting, and directing. One surprising aspect of the industry is that a different director often handles each episode. This structure requires a high level of coordination across a creative enterprise.

I just marveled at the fact that it is. It's like a remarkable circus that gets sort of built for six or nine months, hundreds of people who are engaged in this creative enterprise, both in terms of writing of the scripts, to the acting, to the crews, to the various different directors that direct each episode.

The power of the editing room is another key lesson from this foray into television. A narrative can be changed and improved significantly after the cameras stop rolling. This realization started when the book Too Big to Fail was adapted into a film. Watching the process in Los Angeles showed how extraordinary things can happen during the final stages of crafting a story.

Andrew is currently fascinated by the history of tulip mania. He hopes to investigate what exactly happened during that period and whether a book could be written with the same detail as a modern financial history. He is unsure if the necessary archives exist to support such a project. Tyler points him toward specific research by Peter Garber that contains relevant data.

I have become obsessed with tulips because of this experience. I want to go back to understand exactly what happened. I don't know if you could recreate a book like 1929 or Too Big to Fail about the tulip craze, because I don't know if the archives exist.

While Andrew is interested in these historical events, his immediate future involves a shift in focus toward his family. He has three children and his wife has requested that he hold off on writing another book until they are in college. He plans to spend more time with them while keeping his research interests in the back of his mind.