Author
John Kenneth Galbraith
2 reading cards from 2 books · 1955–1990.
2 cards
The Great Crash 1929 · 1955
Prosperity hides fraud; the crash doesn't create it, it reveals it all at once.
Galbraith's thesis is that prosperity makes everyone relaxed and incurious: auditors stop digging, customers stop asking, and abuses accumulate unseen. When times turn bad, the whole inventory comes to light at once, and the revelations seem to confirm the panic — though the rot had been there for years. The mechanism is a reversed timer: the longer the good stretch, the larger the bezzle and the harsher the moment of exposure. His own example is 1929, when the crash unearthed an avalanche of embezzlements the boom had quietly stockpiled.
“At any given time there exists an inventory of undiscovered embezzlement in, or +in+, Business. This inventory — it should perhaps be called the bezzle — amounts at any moment to many millions of dollars. It also varies in size with the business cycle.”
A Short History of Financial Euphoria · 1990
Every bubble is sold as novelty, but it's the same speculation wheel with new scenery.
Galbraith argues that financial euphoria has a short memory because the recollection of losses fades with the generation that lived through them. His mechanism: every bubble arrives with a narrative about novelty — land, railways, the internet — which makes old warnings seem inapplicable. His example is the 1929 crash: many investors believed stocks could only rise, because a new industry had arrived. The book shows that genuine technological novelty does not abolish the psychology of speculation; it merely gives it a fresh setting.
“The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”