The Great Crash 1929

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1. 01

   Galbraith names the bezzle: the stock of undiscovered fraud and abuse that grows in good times and is suddenly exposed when the cycle turns.

   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.”

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