1929 vs Today: What’s Changed
Takeaways:
- The 1929 market lacked basic protections like the FDIC, SEC, and unemployment insurance
- The Federal Reserve now acts as a lender of last resort to stabilize the system
- Circuit breakers and margin rules might reduce the risk of panic-driven collapses
- The “Fed Put” has shaped market responses since the 1987 crash
- Widespread investor participation makes systemic failure far less tolerable today
1929 vs Today: What’s Changed – Links
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Ben Carlson post on “A Wealth of Common Sense” Why We Can’t Have Another 1929
1929 vs Today: What’s Changed – Transcript
1929 vs Today: What’s Changed
Our friend Ben Carlson from Ritholtz Wealth Management wrote a post in November, 2025 talking about why we can’t have another 1929.
He wrote this in response to a New York Times article that said, “Hey, we may be on the verge of another 1929.”
And of course, that was in response to a book that the CNBC host, Andrew Ross Sorkin, with his book that came out last fall.
So Ben goes on to point out in his article, and we’ll link to it in the show notes, that there was no FDIC in 1929. That was created in 1933 as a response to the stock market crash. There was no SEC, no Securities and Exchange Commission – that wasn’t created until 1934.
There was also no social security at the time.
There was no unemployment insurance.
There were no circuit breakers in place (where) if the market fell a certain amount, the stock market would close. That didn’t happen until after the 1987 crash. I was there.
There were no margin requirements (in 1929).
There were no short sale rules (in 1929).
There was no economic data getting released – in real time – with all these talking heads on tv, breaking it down for us.
But more importantly, one of the things that Ben also mentioned in his post is that the Fed, the Federal Reserve, didn’t act as a lender of last resort.
That actually didn’t start until after the 1987 stock market crash.
In fact, Alan Greenspan. Uh, Alan Greenspan had just come on as the new Fed Chairman in August of 1987. And, here it is two months later, October of 87… he is being thrust right into the spotlight.
The day after stock market crashed… so we’re talking…. the day after… would be October 20th, 1987.
I remember reading this quote as it came across on the tape.
Uh, he said, “We are affirming the Federal Reserve’s readiness to serve as a source of liquidity, to support the financial system.”
In one phrase, he basically said, “Hey, we’re going to backstop the financial system if banks run into problems.”
That was a real concern… through the day before, uh, October 19th. People were worried that the financial system wasn’t going to be able to stand on its own two feet.
We get this “Greenspan Put” in 1987. Today, we call it the “Fed Put,” because we have, you know, several chairmen since then.
But the Fed later, 10 years later, bailed out long-term capital management, a hedge fund in 1998, the hedge fund itself blowing up and going away.
Well, you know, there’s problems with that, but it had the ripple effect of (potentially) taking down some other pretty large influential banks. And so the Fed had to step in and do something about it.
Just a few ?years later, after the “dot com” implosion in 2000, we saw the Fed again, lowering rates, to try and keep things a afloat in ?the economy.
And again, they lowered rates after 9/11/2001 (9/11).
We saw them take interest rates down to zero in 2008.
We have a “hyperactive Fed,” compared to the first 50, 60 years of their existence. The Federal Reserve now is hyperactive in, helping sustain the economy.
I don’t see how in the financial system we can have another 1929. I don’t see how that’s going to work. Ben also mentioned in his article, that a very small percentage of people were actually, uh, investing in the stock market.
Today, something, uh, a number close to 60%. he reports, uh, are now invested in some way through stocks, mutual funds, ETFs, through their 401k plans into stocks.
There’s a lot (at stake), a lot riding on this.
Thanks for watching 1929 vs Today: What’s Changed
