Lessons of the Great Depression

Summary

Against the Rules: The Big Short Companion

Episode: Lessons of the Great Depression

Date: November 11, 2025
Hosts: Michael Lewis & Lydia Jean Kott
Main Guest: Andrew Ross Sorkin

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Episode Overview

Theme:
To mark the 15th anniversary of "The Big Short" and reflect on the legacy of the 2008 financial crisis, Michael Lewis and Lydia Jean Kott explore the historical echoes and divergences between the Great Depression (post-1929 crash) and the 2008 crisis. Michael sits down with financial journalist and author Andrew Ross Sorkin—whose latest book covers the 1929 crash—to examine what lessons remain unlearned, how crises shape reform, and what recurring behaviors shape America’s economic landscape.

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Key Discussion Points & Insights

1. Comparing Financial Crises: 1929 vs 2008

• Conceptual Framework:
  Art history technique of putting two pictures side by side:

  “As a tool for forcing our mind to move about the 2008 financial crisis, I can't really think of a better event than the 1929 crash and the slow rolling depression that occurred after it.” — Michael Lewis (02:46)

• Why Compare?
  • Both crises involve mass speculation, credit overextension, and a shift in public psychology toward finance.
  • The policies, characters, and reforms in each event shape subsequent attitudes toward risk, regulation, and recovery.

2. What Led to the 1929 Crash?

• Credit Boom & Mass Stock Mania:

  “The 1920s were probably one of the greatest stock booms in history, in large part because Americans got access to credit for the first time… It had become a national pastime to trade.” — Andrew Ross Sorkin (04:43)

• Speculative Bubbles:
  • Leverage and instruments piled upon each other like “Russian dolls of leverage” (05:20).
  • Market manipulation and easy credit created a culture of gambling.
• Aftermath:
  • The crash fundamentally changed the psychology of a generation. A personal story:

    “My grandfather… watched somebody jump out of a building and kill himself. He… never bought a share of stock his entire life after that.” — Andrew Ross Sorkin (06:30)

3. Crafting History: Sorkin’s Approach

• Motivation:
  • Sorkin sought to uncover the motives and personalities behind 1929’s turmoil, similar to what he’d done for 2008.
  • Research involved “eight years of excavation” in disparate archives (08:00).
• Colorful Finds:
  • “Fishing with Hitler” anecdote exemplifies the unexpected humanity and blindness of financial leaders (09:18).

4. Historical Characters & Their Modern Equivalents

• Thomas Lamont:
  • De facto JP Morgan leader.

    Analogy: “Maybe he was the Jamie Dimon of that period.” — Andrew Ross Sorkin (10:27)

  • In both crises, JP Morgan’s leadership played pivotal roles in shaping government responses.
• Jesse Livermore:
  • The era’s short-selling superstar—part public philosopher, part tragic figure.

    “He was so sure of his ability to make judgments under uncertainty, and yet… made so many mistakes.” — Michael Lewis (11:52)

• Carter Glass:
  • Virginia senator, architect of the Federal Reserve and Glass-Steagall Act.
  • Compared to Elizabeth Warren: a regulatory response “Cassandra” focused on reform post-crisis (13:16).

5. Reformers: Carter Glass vs. Elizabeth Warren

• Similarities:
  • Both loud, widely covered figures warning of systemic risk.
• Key Differences:

  “Carter Glass… was genuinely a capitalist… not so quick to completely and utterly break up [the system]. Elizabeth Warren was much more about protecting ordinary Americans from the financial predators.” — Andrew Ross Sorkin (18:11)

• Nature of Reforms:
  • Glass-Steagall (1933) vs. CFPB (post-2008): differing emphases on structural prevention and consumer protection.
• Public Attitudes:
  • In 1929, blame was less directed at elites; by 2008, there was explicit outrage at financial predators (19:51).

6. Societal Narratives and Political Change

• The aftermath of 2008 was “much more about bashing the financial elites for their predatory behavior.” (19:51)
• In 1929, reform and outrage developed slowly:

  “People did have to blame themselves… they knew they were gambling.” — Andrew Ross Sorkin (20:52)

• Prohibition, not financial reform, dominated early 1930s politics (22:59).
• After 2008, American trust in experts and institutions sharply eroded, influencing later political outcomes:

  “Almost draw a straight line to the election of President Trump in 2016 and arguably again in 24… The institutions, the experts let us all down.” — Andrew Ross Sorkin (23:38)

7. Unlikely Modern Parallels: John Raskob and Elon Musk

• John Raskob: GM executive, inventor of consumer credit, political player, builder of the Empire State Building.
• Raskob’s outsized ambition and media savvy likened to Musk, but 2008 had “no Elon Musk.” (25:11–27:11)

8. How the Federal Reserve Responded

• 1929:

  “The response… was mostly for the Federal Reserve to sit on its hands… They were scared that… Congress could decide to shut them down.” — Andrew Ross Sorkin (32:01)

  • Reluctance led to passive inaction and eventual disaster.
• 2008:
  • Central bankers, schooled in 1929’s lessons (notably Bernanke), aggressively flooded the system with money:

    “The counterfactual is so ugly. The counterfactual is the depression. It’s 25% unemployment rate.” — Michael Lewis (34:38)

  • These policy differences likely averted another global depression.

9. Competing Narratives and Lasting Impacts

• Post-1929, blame was divided among reckless banks, short sellers, and “investment pools”—proto-meme stock schemes (36:19–37:25).
• Sorkin shares a modern example: the spontaneous creation of a “Sorkin Coin” as a modern echo of 1920s manipulation (38:42).

10. Regulatory Backsliding & Enduring Distrust

• In both eras, reform is followed by efforts to dismantle it; currently, less interest in regulation and more tolerance for “innovation” over enforcement.

  “There’s a lot less people minding the store. And when people aren’t minding the store and you add in the leverage and you add a little speculation, you get problems.” — Andrew Ross Sorkin (41:14)

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Notable Quotes & Memorable Moments

• On the enduring American Dream:

  “The American dream becomes the get rich quick dream, which… we live with to some degree today.” — Andrew Ross Sorkin (05:13)

• On generational scars:

  “My grandfather… never bought a share of stock his entire life after that.” — Andrew Ross Sorkin (06:30)

• On historical blindness:

  “Fishing with Hitler is just an image that I couldn’t get out of my mind once I read it.” — Michael Lewis (10:04)

• On historical agency:

  “[Glass] was the Elizabeth Warren of his time. He creates what is now known as Glass-Steagall…” — Andrew Ross Sorkin (13:16)

• On modern echoes:

  “The investment pools of 1929 are very much alive and well today [in crypto]…” — Andrew Ross Sorkin (39:52)

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Timestamps for Key Segments

• Introduction & Art History Analogy: 02:32–03:54
• 1929 Crash: What Happened and Why: 04:32–07:03
• Sorkin’s Motivation & Research: 07:03–09:18
• Profiles: Lamont, Livermore, Glass: 09:18–14:19
• Comparing Reformers (Glass vs. Warren): 17:24–19:51
• Societal Blame & Political Change: 19:51–23:38
• Parallels: Raskob & Musk: 24:18–28:21
• Federal Reserve Responses: 31:29–35:43
• Narratives & Market Manipulation: 35:43–39:52
• Current Erosion of Regulation & Trust: 39:52–41:14
• Closing Reflections: 41:14–41:55

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Tone & Style

Michael Lewis blends curiosity and storytelling with a playful yet incisive tone; Sorkin is analytical, clear, and candid—infusing personal anecdotes and drawing lively parallels between past and present.

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Final Thoughts

This episode paints a richly comparative portrait of two pivotal financial crises—reminding listeners that while history rarely repeats, it certainly rhymes. The cascade of speculation, the limits of reform, the unpredictability of political and regulatory responses—and the human need both to speculate and to forget—underscore how financial history remains a living force.

Transcript

[Lydia Jean Kott]

This is an iHeart podcast.

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[Andrew Ross Sorkin]

Lenovo.

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[Michael Lewis]

Pushkin.

[Lydia Jean Kott]

I'm Lydia Jean Kott.

[Michael Lewis]

And I'm Michael Lewis, and this is.

[Lydia Jean Kott]

Our big short companion series on against the Rules. Michael, the other day you were telling me when you were talking about this episode how you were thinking about your days in college when you studied art history. Tell me about that. Why were you thinking about that?

[Michael Lewis]

One of the things that happens when you're studying art history is professors as just a teaching tool. Often they'll just throw up two pictures side by side and ask you to compare and contrast. And you just look at a Rembrandt painting differently if it's next to a Rubens and you start thinking about what are the differences? Like what are the similarities, what are the differences. It's a tool for forcing your mind to move. And as a tool for forcing our mind to move about the 2008 financial crisis, I can't really think of a better event than the 1929 crash and the slow rolling depression that occurred after it. And it just so happens that a really great financial writer, Andrew Ross Sorkin, who wrote a really good book about the 2008 financial crisis called Too Big to Fail, has written a history of the 1929 crash and the subsequent depression. And I just thought, let's haul him on and put the paintings next to each other and just talk about what happened then and how it rhymes or doesn't rhyme with what happened in 2008.

[Lydia Jean Kott]

Right. And we should say that Andrew Ross Sorkin also has a column for the New York Times, a financial column, and he's the co host of the Squawkbox on cnbc.

[Michael Lewis]

He has basically four careers going at once. I don't know how he does it. I really don't know how he does it. But the book is really interesting. I've read quite a bit about the 1929 crisis. I read all the great things that were written back in the 50s and the 60s about it. And it's an original contribution.

[Lydia Jean Kott]

And I can say Michael's not the easiest person to get to like your book, so that's high praise.

[Michael Lewis]

I began my conversation with the journalist Andrew Ross Sorkin by asking him to explain what led to the crisis of 1929, the one that eventually set off the Great Depression.

[Andrew Ross Sorkin]

Quick summary is the 1920s were probably one of the greatest stock booms in history, in large part because Americans got access to credit for the first time and not just credit to go buy actual products for their homes, but to be able to go buy on margin stock. And people thought it was free money. And so you got into 1927, 1928 and then into 1929 and it had become a national pastime to trade. There were brokerages on the corners the way there are Starbucks on the corners today. It was literally like that. And people go out of their minds, they start gambling. I mean, the American dream becomes the get rich quick dream, which by the way, we Live with to some degree today. But I think that emanated in a large way. And in the 1920s, and you had investors piling in at the same time as you had folks on Wall street and financiers taking advantage of them insofar as they're both manipulating the market in a whole bunch of different ways. They're creating all sorts of increasingly leveraged instruments that look like Russian dolls of leverage piling on top of each other. And we'll never know. We'll never know what it exactly was that sort of was tipped the balance, but the balance was tipped. And I think it ultimately fundamentally changed the psychology of an entire scarred. An entire generation. You know, I don't tell the story in the book, Michael, but I'll tell you. My grandfather was 11 years old and was a messenger down in October of 1929. He was down there during this.

[Michael Lewis]

He was on Wall Street.

[Andrew Ross Sorkin]

He was on Wall Street. He had an older brother who actually he had skipped school to go down there. And he watched somebody. He used to tell the story. He watched somebody jump out of a building and kill himself. And my grandfather, who's no longer alive, lived till, I think, 92 or 93 now. Never bought a share of stock his entire life after that. He bought bonds and other things. But he would always say, the stock market is not for us. The stock market is like this other thing.

[Michael Lewis]

How'd you get interested in the first place of writing a history of the Crash?

[Andrew Ross Sorkin]

This is gonna sound so silly. Having written Too Big to Fail, I thought, ah, I should know something about 1929. I mean, I know sort of the contours, the outline. I read some of the more famous books, and while there were some fascinating books that totally intrigued me about the period, I was sort of searching, to be honest with you, for the Michael Lewis version of this. I was searching for the. Or the too big to fail version.

[Michael Lewis]

You were looking for your own version of this.

[Andrew Ross Sorkin]

I wanted to understand the motivations and the personalities and what they were actually thinking in that moment and why they were thinking what they're thinking and what they did afterwards. All those things. I was having to give a speech up at Harvard, and I got there early and I went to the Baker Library and I walked in and I asked the librarian, the archivist there, if I could look at the Thomas Lamont papers from 1929.

[Michael Lewis]

Tell us quickly who Thomas Lamont was.

[Andrew Ross Sorkin]

Thomas Lamont, effectively was the de facto CEO of JP Morgan at the time. He wasn't actually the CEO, the real CEO was named Jack Morgan. He was the son of JP Morgan. But this was the guy who basically ran the place and made most of the important decisions. And his secretary used to keep transcripts of his phone conversations with Hoover. And so I'm sitting there in the library reading this stuff, going, oh, my goodness, well, maybe you could write a book like this. And interestingly, I went and then talked to that archivist and she said that she had read too big to fail. And she said, actually, Andrew, you really can't. You can't do what you want to do. I know what you're trying to do. And it's not really possible. It's not like one or two or three archives either here at Baker or Columbia or Yale, where you can sort of excavate the stuff and then you'll be able to write it the way you want to write it. And I sort of just didn't want to believe her. And then I went on this sort of eight year journey to try to figure out. And she was right in the following way. It was an all in one place or two places or three places or four places. You had to do this sort of like just a different kind of excavation.

[Michael Lewis]

There is this line that I wrote you about that you must have found in the Lamont archives when you were at the Baker Library. And this is your description of Thomas Lamont. His attraction to men in power reportedly even caused him to ask a senior German official, just what sort of fellow is Hitler? Is he the sort you go fishing with? The reply, my dear Lamont, he is the nicest fellow in the world. Always making jokes. You couldn't ask for a more delightful companion. Where on earth does that come from?

[Andrew Ross Sorkin]

If I recall, there was a book written in, I want to say late 30s or maybe even late 40s, that, that mentioned Lamont and described this fly.

[Michael Lewis]

Fishing with Hitler is just an image that I couldn't get out of my mind once I read it. Once I read it, I couldn't get.

[Andrew Ross Sorkin]

It out of my head once I saw it. I kept thinking, how am I gonna work this in?

[Michael Lewis]

So let's run through the characters and let's just describe them. And then the analogy, Thomas Lamont, you've given us a little sketch.

[Andrew Ross Sorkin]

Who do you think the closest to.

[Michael Lewis]

Thomas Lamont in 2008 was?

[Andrew Ross Sorkin]

Well, I would actually argue maybe he was the Jamie Dimon of that period. I think that he's probably the closest at that time actually to a Jamie Dimon who was trying to work with the government, who was trying to have These relationships.

[Michael Lewis]

It's kind of interesting that in both crises, J.P. morgan running J.P. morgan plays an analogous role.

[Andrew Ross Sorkin]

And if you think about it, the government did rely. They were relying on Thomas Lamont's advice in 1929 and after that. And they were relying not only on Jamie Dimon's advice in part, but they were also relying on his largesse and money when he was, you know, saving Bear Stearns and being used to buy some of these other banks.

[Michael Lewis]

Yes. Tell us about Jesse Livermore.

[Andrew Ross Sorkin]

Jesse Livermore was a short seller. He was a trader, hedge fund manager.

[Michael Lewis]

He wasn't just a short seller.

[Andrew Ross Sorkin]

He was the star short seller in the world. He was on the COVID of magazines. He was a philosopher king. People listened to his every word. I'm trying to think in my head now, though, about 2008, and given that the Big Short has a lot. Has a number of short sellers, but none of those short sellers had the sort of fame at the time.

[Michael Lewis]

There's a little Jesse Livermore in all my characters in the Big Short. I mean, Livermore. I've told you this. I sold Showtime a TV pilot, a pilot based on the life of Jesse Livermore. And it opens during the crash. One of the many things that appealed to me about him as a character was that he was so sure of his ability to make judgments under uncertainty, and yet. And made so many mistakes along the way. And he was so kind of seemingly in control of his professional life. His personal life was absolute chaos.

[Andrew Ross Sorkin]

He would call reporters and they would come to his office. And meanwhile, he, by the way, was, you know, he was drinking. He had alcohol problems. He had personal problems. He was being sued constantly by everybody for everything.

[Michael Lewis]

And he's short the. Into the crash.

[Andrew Ross Sorkin]

He's short into the crash. He had actually, prior to that, almost gotten out of the shorting business because the truth was being a short seller on Wall street in 1928 and in 1929 seemed like terrible, terrible businesses. And then this guy comes back in at the last minute and wins.

[Michael Lewis]

So any other characters that you would like to highlight?

[Andrew Ross Sorkin]

So to me, the. The other major character that drives the entire story is Carter Glass.

[Michael Lewis]

Oh, yes.

[Andrew Ross Sorkin]

Carter Glass is a senator from Virginia. He had been the treasury secretary. He later gets asked to be the treasury secretary again by Roosevelt. And he helped create the law that established the Federal Reserve. He was the Elizabeth Warren of his time.

[Michael Lewis]

That's right.

[Andrew Ross Sorkin]

He creates what is now known as Glass Steagall, the Glass Steagall act, which ultimately broke up the banks between the sort of casino gambling side of the bank and traditional commercial lending side of the bank. And of course this becomes a feature of what ultimately happened in 2008. A lot of the calls for by Elizabeth Warren, in fact after 2008 to break up the banks all over again, in large part because the the rules that had been put in place by the Glass Steagall act in 1933 got watered down in the 90s and some people argue ultimately led to some of the things that took place in 2008.

[Michael Lewis]

When we return, I ask Andrew to compare these reformers who arose after each disaster on wall.

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[Michael Lewis]

Hey.

[Ed Helms]

Everyone, Ed Helms here and hi, I'm.

[Kal Penn]

Cal Penn and we're the hosts of Irsay, The Audible and iHeart Audiobook Club.

[Ed Helms]

This week on the podcast I am sitting down with Jenny Garth, host of the I Heart Podcast. I choose me to discuss the new Audible adaptation of the timeless Jane Austen classic Pride and Prejudice this is not a trick question. There's no wrong answer. What role would I play?

[Michael Lewis]

You know what? I can see you as Mr. Darcy.

[Lydia Jean Kott]

You got a little Colin Firth.

[Ed Helms]

Okay, that's really sweet, I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett. Here, listen to Earsay the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts.

[Michael Lewis]

I'm back with Andrew Ross Orkin. When you compare and contrast these two characters and what they wanted to do, Carter Glass and Elizabeth Warren, what differences do you see? Like they're, they're policing a slight. A different event. They're coming in after a different. The first event is it's a stock market bubble or it's a, it's a debt fueled stock market boom. The second event is a debt fueled housing boom. The role the banks slightly different in each case. And the institutions that get created are different. The SEC gets created out of the 20th. The CFPB gets created out of the 2008 crisis. So like, what differences do you see between kind of what they are thinking about, what bothers them?

[Andrew Ross Sorkin]

Well, so the similarities are they are vocal, they are loud, they got lots of press, and they are the Cassandras. They are the Cassandras in the room from the beginning. The biggest distinction between the two of them is that Carter Glass, I think actually was genuinely a capitalist and somebody who believed in the banking system in large part because he had helped develop the Federal Reserve and he believed in these systems. He wasn't so quick to completely and utterly break them up. And without giving away too much of the story, the actual creation of that law, while it has his name on it, is so much more complicated and dramatic and wild. I think actually to. In my estimation, it was actually one of the great surprises to me as I was reporting on this, because there are so many other players who get involved in the creation of that law, including people in banking itself, which I think would shock, which would shock Elizabeth Warren, given her love for citing that bill today. I think Elizabeth Warren was much more about protecting ordinary Americans from the financial predators. From the predators. I think she was much more focused on that, the ordinary American, the quote, unquote, little guy. She really wanted to make sure that the system worked for them, that it was equal for them. Whereas I'm not sure those were the instincts or at least what was the motivation for Carter Glass.

[Michael Lewis]

No, there is, in the aftermath, there seems to be. There's a really different tone to the aftermath of 08 than there was from the aftermath of 29. In the aftermath of 29. It doesn't. In your story, as you tell the story anyway, I don't really get the feeling that ordinary Americans are thought to have been exploited, that these financial predators came in and got them to do things that they wouldn't have done otherwise and we should all feel sorry for them. Whereas in the aftermath of 08, that was very much the story. It's like we got the strippers in Las Vegas to buy six houses with subprime loans and we should be ashamed of ourselves for having done that. There was much more emphasis on bashing the financial elites for their predatory behavior. Because you could very easily say at the back end of 08, one natural sort of interpretation is like, once again, ordinary Americans got carried away and they borrowed money they shouldn't have borrowed to speculate in ways they shouldn't and they should be held responsible for that kind of thing.

[Andrew Ross Sorkin]

So I think there's two distinctions here. One is that the sort of churn on Wall street, the Occupy Wall street sort of movement that happened in the aftermath of 2008 did happen to some degree after 29. It just took a lot longer for it to happen. And it oddly happened for slightly different reasons, which is to say it was like a very slow collapse. People think that in 1929 the market collapsed. You hear about this, you know, the one day collapse and that's it. It was really not just that. It was the psychological break of that and then into 30 and a whole bunch of other things that happened, including, by the way, Smoot Hawley, which was a tariff act somewhat similar to what was happening today. But it had a hugely deleterious effect on the economy. And you had unemployment then spike at one point to 25%. Once we got to that, which by the way, didn't really happen until 1932, then you had people pointing fingers and doing lots of things in terms of how they thought about Wall street and the bankers. But I don't think people were putting that all together immediately in the aftermath of 1929. Also, in part because people did have to blame themselves in the following way. They knew they were gambling to some degree. It was a gamble they weren't trying to. In 2008, at least, it was framed up in the idea of this American dream that we would all own a home.

[Michael Lewis]

And it wasn't.

[Andrew Ross Sorkin]

And you actually got something ostensibly for it.

[Michael Lewis]

Yep.

[Andrew Ross Sorkin]

This was truly about trading paper back in 1929.

[Michael Lewis]

Yeah, that's a, that's That's a big distinction. The other difference, and I didn't know this, I just assumed that the leftward turn in American politics and the rise of Roosevelt was a direct response to the hostility towards financial elites and the crash. And you make the point that, like, that wasn't even the most salient issue.

[Andrew Ross Sorkin]

Nope.

[Michael Lewis]

Roosevelt's first campaign.

[Andrew Ross Sorkin]

Prohibition. Prohibition was.

[Michael Lewis]

We need to do away with Prohibition.

[Andrew Ross Sorkin]

People wanted it. People wanted to drink.

[Lydia Jean Kott]

Right.

[Andrew Ross Sorkin]

They really wanted to drink.

[Michael Lewis]

Can you imagine after the SEC is.

[Andrew Ross Sorkin]

Created in what, 1933, 1934. 34, yep.

[Michael Lewis]

That 10 years later or even eight years later, people are calling for. It's dismantling it because it's getting in the way of Wall street doing what it needs to do. I mean, the CFPB is created on the back end of the financial crisis, and it's, in historical terms, a kind of nanosecond before there's already a tax on it, there's an attempt to kind of neuter it.

[Andrew Ross Sorkin]

Well, don't I look at the 2008 financial crisis and almost draw a straight line to the election of President Trump in 2016 and arguably again in 24. This idea that the institutions, the experts let us all down. They failed us. They told us it was all going to be fine. They, you know, those quotes from even Ben Bernanke and others in 2007, you know, suggesting that we weren't on the precipice, and then we were in 29.

[Michael Lewis]

The experts weren't similarly defenestrated. They were. They were, like, empowered in a way, at the back end of it.

[Andrew Ross Sorkin]

They were empowered until they weren't. Hoover immediately empowered them because he was a Republican and he was having meetings with CEOs the way Trump is having meetings with CEOs. He was calling them all to the White House. They were doing photo ops left and right now. He was desperately trying to press them to do certain things less successfully than Trump was in certain cases, in that he would tell them, for example, that he wanted them to hire more people, and then the question is, would they? And of course, they did the opposite. So the other character that I fell in love with, to be honest with you, is John Rascob. John Raskob, to me, actually, is very much the Elon Musk of that moment. John Raskob helped develop General Motors.

[Michael Lewis]

So there was no Elon Musk in 2008.

[Andrew Ross Sorkin]

There was no Elon Musk in 2008. But back in the 1920s, John Rascob had become a hugely successful executive in the automobile business. He helped effectively create the idea of credit, like truly, because he created the credit unit at General Motors to help them sell cars. Prior to that, actually, most people thought it was a sin to take on debt. And he really fundamentally reshaped that. He then took his winnings from his General Motors days and became a. A hugely successful investor and was making more money investing than he'd ever even made at General Motors. He then, like Elon, decides that he has all this money, has all this power. He's going to get into politics. And now he doesn't choose the winner in this case. He doesn't choose Hoover. He chooses Al Smith, who was running against Hoover. And he becomes the head of the Democratic. I mean, that's what he becomes. And once he loses, and it was really the first loss in his whole life almost, he then makes it his mission to undo Hoover's reputation, to hurt Hoover reputationally by effectively paying people to write articles and give speeches, undermining his reputation. And by the way, Hoover has a very bad reputation even to this day, I believe to some degree you can look back at John Raskob and say he was responsible for that. Of course, Elon Musk ended up buying Twitter and uses it in all sorts of interesting ways to bolster and undermine political reputations. And then he goes off and does the equivalent of building a spaceship back in 1929 called the Empire State Building.

[Michael Lewis]

Right?

[Andrew Ross Sorkin]

And it really does.

[Michael Lewis]

It maps pretty neatly onto Elon's life.

[Andrew Ross Sorkin]

And he was also a philosopher king in that the media paid attention to everything this man said. He had all sorts of other ideas. At one point he was trying to create the equivalent of probably one of what would have been one of the first mutual funds in the world. And he also becomes an advocate for what ultimately turns out to be the five day work week. I didn't know this back then. Most people worked six days a week, including, by the way, people in the stock market. The stock market was open on Saturdays in the morning. But he writes a paper in November of 1929 that actually got overlooked until the 1930s, where he basically made the argument that it would be better for the economy if there was a five day workweek, because that people would have more leisure time, they would have to go out and buy more cars. He owned stock and General Motors. They would buy camping equipment, they would do home decor and other things, and they would spur the economy. And that was his argument. And ultimately he was proved right. So I found him to be just a fascinating human at the intersection of all of these different component parts.

[Michael Lewis]

We're going to take a quick break. When we come back, Andrew and I talk about how the Federal Reserve failed to save the day back in 1929.

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[Ed Helms]

Hey everyone.

[Kal Penn]

Ed Helms here and hi, I'm Kal Penn and we're the hosts of Irsay, The Audible and iHeart Audiobook Club.

[Ed Helms]

This week on the podcast, I am sitting down with Jenny Garth, host of the iHeart podcast. I choose me to discuss the new Audible adaptation of the timeless Jane Austen classic Pride and Prejudice. This is not a trick question. There's no wrong answer. What role would I play?

[Michael Lewis]

You know what? I can see you as Mr. Darcy.

[Lydia Jean Kott]

You got a little call in first.

[Ed Helms]

Okay, that's really sweet, I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett here. Listen to Earsay the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts.

[Michael Lewis]

I'm back with Andrew Ross Sorkin. So to push this poem a little further and talk more about how these two events, 2008, 1929, rhyme. The people at the Federal Reserve in 2008 were scholars of what had happened in 1929 and how the Federal Reserve, which really faced its first test in 1929, responded to it. Talk a little bit about that response and how was similar or different from the response in 2008.

[Andrew Ross Sorkin]

So the response to the crisis in 1929 was mostly for the Federal Reserve to sit on its hands. And there's a major distinction to understand the almost insecurity that people on the Federal reserve felt in 1929 because it was still a new institution. He'd only been born in 1913. There were genuine concerns, and I have diary memos and notes about this, that the board members really felt that Congress could decide to shut them down. You know, we have debates today about the independence of the Federal Reserve. Back then, they were scared that they weren't going to be. They weren't going to exist if they made, you know, the wrong move. They were going to be, you know, completely hung out to dry. And so for the most part, you know, in 1928, 1929, as the market was getting frothier and frothier, as much as they wanted to tamp it down, even by raising interest rates. By raising interest rates, they were very worried about doing that, and they were very worried about harming the economy because they thought if they harmed the economy politically, that would not be a palatable situation vis a vis their own independence. And so they did not take the kinds of steps that you would have wanted them to. And they were debating them. They were having conversations constantly about raising interest rates, and yet they, for the most part, didn't want to. What they did instead, which is they would send out memos to banks and say, you know, stop speculative lending. But they wouldn't explain what that even meant. They would just tell them to do this. And then some banks would just stop lending completely, by the way, as a function of this, they would take the memo as gospel and they would stop lending, which was a real problem for the economy as well. 2008, obviously, Ben Bernanke, who was the Fed chair at that point, his thesis in college at Princeton was on the financial crisis of 1929. That's what he studied, the Great Depression. And I think one of the lessons was that the Federal Reserve needed to flood the system with money that. That is the way you keep the art of the system moving. And of course, that's what they did. Now, in the context of doing that, that was also remarkably unpopular. I mean, bailouts were unpopular. All of it was quite unpopular yet. And I don't know where you stand on this, I think in the end, as we look back, I think a lot of those were probably the right decisions. As politically unpopular as they were.

[Michael Lewis]

People who get upset about that decision don't really fully imagine the counterfactual. And who's going to pay the price in the counterfactual? The counterfactual is so ugly. The counterfactual is the depression. It's 25% unemployment rate. I mean, one of the striking things about some of the numbers in your narrative is one point. You describe the cost to the economy by the 30s, and like GDP or GNP or whatever they were measuring at the time is down by 50%. Nothing like that happened after 2008. And there's a reason it didn't happen, because they flooded the economy with dollars.

[Andrew Ross Sorkin]

In the 1930s, everything moved almost into an austerity period. Not just at the Federal Reserve, but even politically, there wasn't an ability or a view that they should be completely propping up the economy. Until, of course, Roosevelt shows up on the scene, and some people thought he was gonna spend money like a wild, drunken sailor. But ultimately, that was the New Deal did provide for a lot of employment that ultimately helped the economy. Now, on top of that, of course, there was a war and a whole bunch of other things that were going on.

[Michael Lewis]

Yes. When I first got in touch with you, the first question I asked you, and what I was stewing on is the different narratives that emerge at the back end of one of these events and how there can be competing narratives, like, it takes a while for the society to agree upon a truth, if it ever does, about what just happened. And their competing narrative is about 2008. Now, was there a similar thing on the back end of the 1929 crash? Were there people trying to tell different stories than the one that emerges? Is the consensus?

[Andrew Ross Sorkin]

Yes. In that there were some folks who were blaming the banks for being reckless in terms of lending. And the other competing narrative was the idea that somehow short sellers were responsible for all of this. For a period of time, Congress was looking at short sellers. They were trying to name names. They thought some of the short sellers, by the way, were in cahoots with certain politicians about how all of this was going on. Then there was another version of this that blamed this on stock manipulators. The idea of what was back then, and it was a real thing called investment pools where you'd have a financier who would get a whole bunch of his friends together and say, we're literally going to pump this stock. And it was, by the way, it was legal. It was not illegal to do this.

[Michael Lewis]

No, it was amazing what they could do. They could do the equivalent of, I buy some Pfizer stock and I call you, Andrew and say, could you go on television and say, everybody should buy Pfizer? Buy some Pfizer, too?

[Andrew Ross Sorkin]

Even crazier than that, because they would have the specialist at the stock exchange and rca, by the way, back then was the meme stock of the moment. It was the glamour stock of that period. And the specialist who was in charge of that stock would literally run almost a theatrical routine on the floor of the exchange where he would have people placed almost like actors, saying, okay, I'm going to buy for this. You're going to buy for this. You're going to buy for this, you're going to buy for. And literally, they would ladder up the prices, and then they would, quote, unquote, pull the rug. And everybody almost knew this was happening. In fact, some investors were trying to get on the back of these pools. They knew it was happening, and they thought, if I can get in and out before they get out, I can win, too. So there was a whole sort of game that was being played, by the way that game is being played today in the world of crypto. In the world of crypto. I don't know if I ever told you this wild story that happened to me earlier this year. I was on TV with Larry Fink, and he makes a joke, says there should be a Sorkin coin. Okay? Two hours later, somebody has created the Sorkin coin, no joke. And this Sorkin coin is now going up by millions of dollars. Millions of dollars. And I get a text message on X, formerly Twitter, inviting me into a DM group, one of these direct message groups. And there are people saying to each other, you know, I'm going to put in a million dollars here, then you're going to put in $3 million. It was just happening digitally in my hands. I was watching this happen. It was the wildest thing. At one point, they were reaching out to my sons. I have two twin boys who are 14. And they were trying to get them. They thought if they could show that the Sorkins owned this coin, which we never did, that that would help them Pump the stock. And so I had to call my son, and they're offering my son $50,000 worth of sorkin coin. And I'm calling up Henry and I'm saying, henry, you cannot talk to these people. Do not respond to these people. We're going to be in jail. We're going to go to court. This is horrible. Please don't do this. And of course, Henry says, you know, dad, I'm leaving a lot of money on the table. So. But. So, yes, the Investment pools of 1929 are very much alive and well today.

[Michael Lewis]

And it does seem like we're living through a period of, you know, increased distrust of the institutions and erosion of the authority of the. Of central authority, but maybe I'm wrong. Do you disagree with that?

[Andrew Ross Sorkin]

I wish I could disagree with you just to make the conversation more fun, but I violently agree with you. I violently agree with you. And my real worry is that when you look at all of the rules that are being undone today, it's not just, do we need new rules that haven't been implemented, it's we have rules that are coming off and a disinterest in looking at some of these things. I'm shocked, for example, that, you know, investors are now buying these things called tokens in private companies, and that's not technically allowed. If you ask the new head of the sec, who's part of the Trump administration, what he wants to do about what seemed like clear violations of the rules, he looks at tokenization, says that's a form of innovation, and he doesn't want to slow down innovation. And so I'm not sure where the police on the beat really are going to be when and if there's a problem, there's a lot less people minding the store. And when people aren't minding the store and you add in the leverage and you add a little speculation, you get problems.

[Michael Lewis]

On that cheery note, we're going to end. I really love the book. It was terrific. And I do think it's curious that your two big masterworks are studies of financial crises. You yourself are such a calm and reasonable person. You seem to be attracted to the other.

[Andrew Ross Sorkin]

I am attracted to whatever's the most interesting thing in crises and failure. Not because I love failure, I root for people's success, but I think that there's so many lessons in failure, and failure unto itself is interesting because there's oftentimes so much we can learn from it.

[Michael Lewis]

Thanks for taking the time to talk to me.

[Andrew Ross Sorkin]

Thanks for taking the time to read the book and to talk to me.

[Michael Lewis]

Andrew Ross Sorkin writes DealBook for the New York Times and is the author of the new book 1929 Inside the Greatest Crash in Wall Street History and How It Shattered A Nation.

[Lydia Jean Kott]

Against the Rules. The Big Short Companion is hosted by Michael Lewis. It's produced by me, Lydia Jean Kott, and Catherine Girardot. Our editor is Julia Barton. Our theme was composed by Nick Bertell, and our engineer is Hansdale Shih. Special thanks to Nicole Optin Bosch, Jasmine Faustino, Pamela Lawrence, and the rest of the Pushkin Audiobooks team. Against the Rules is a production of Pushkin Industries. To find more Pushkin Podcasts, listen on the iHeartRadio app, Apple Podcasts or wherever you listen to podcasts. And if you'd like to listen ad free and learn about other exclusive offerings, don't forget to sign up for a Pushkin subscription at Pushkin FM plus or on our Apple show page and you can get the Big Short now at Pushkin FM Audiobooks or wherever audiobooks are sold.

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[Andrew Ross Sorkin]

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[Kal Penn]

See mintmobile.com hey audiobook lovers, I'm Kalpen.

[Ed Helms]

I'm Ed Helms.

[Kal Penn]

Ed and I are inviting you to join the best sounding book club you've ever heard with our new podcast Irsay the Audible and UN iheart Audiobook Club.

[Ed Helms]

Each week we sit down with your favorite iHeart podcast hosts and some very special guests to discuss the latest and greatest audiobooks. From Audible.

[Kal Penn]

Listen to Earsay on America's number one podcast network iHeart. Follow Earsay and start listening on the free iHeartradio app today.

[Lydia Jean Kott]

This is an iHeart podcast.