Part 7/13:
Andrew points out that many bubbles—be it the South Sea Bubble, Japan's asset bubble of the early 1990s, or the 19th-century railroad panic—share common ingredients: excess credit, technological optimism, and policy misjudgments. The key difference across periods is how quickly authorities respond, with modern central banks attempting to act faster.
Policy Failures and Their Consequences
During the 1929 crash, the Federal Reserve was hesitant and indecisive, failing to provide enough liquidity. Hoover's attempts to raise taxes and implement tariffs further worsened the economic contraction. The subsequent bank failures and soaring unemployment—peaking at around 25%—were a direct outcome of these systemic and policy shortcomings.