When I talk of loss, people say I am spoiling the party.”
— John Kenneth Galbraith, The Great Crash, 1929.
There is a peculiar loneliness in seeing danger before others do. When Roger Babson warned in September 1929 that “sooner or later a crash is coming,” he was derided as a spoilsport—only six weeks before the ignominious end of the Roaring Twenties.
In every age, the voices that whisper caution amid celebration sound discordant to ears attuned to gain. I understand Babson’s burden. The music plays louder each day, and no one wants to leave the (East Wing) ballroom.
I. The Music of Euphoria
Markets, like civilizations, tell themselves stories. Today’s story is that artificial intelligence will rewrite the laws of productivity and wealth. The markets have accepted this creed with evangelical fervor. The S&P 500 now depends on a handful of technology names whose combined valuations exceed the entire economies of most nations. Liquidity, leverage, and faith have replaced analysis. To doubt the narrative is to risk exclusion from the congregation.
Fred Hickey has seen this movie before. I read him faithfully when he cried out to the deaf during the second half of the 1990s. Writing from his quiet New Hampshire study, far from the echo chambers of Silicon Valley and Wall Street, he describes an environment indistinguishable from the peak of the dot-com era: options speculation bordering on gambling, margin debt in record territory, and investors convinced that the Federal Reserve will rescue them from consequence. Hickey calls today’s enthusiasm “the most over-hyped technology frenzy” of his 45 years following the industry.¹
He draws a sharp distinction between the true revolution of the internet and the mirage of generative AI. The former rewired communication and commerce; the latter, he argues, produces dazzling parlor tricks but little enduring value. The prophets of abundance promise superintelligence; the evidence so far suggests hallucination. The little boy in Andersen’s tale has once again shouted that the emperor is naked—and once again, the crowd refuses to listen.
II. The Institutionalization of Delusion
My friend Edward Chancellor, the chronicler of bubbles from Devil Take the Hindmost to The Price of Time (MCM 2022 Christmas book), detects a familiar rhythm. After every crisis, we swear fidelity to prudence, only to relapse into excess once the scars fade.²
Low interest rates, the moral hazard of repeated bailouts, and the cult of innovation have conspired to teach investors that risk is an illusion. The new orthodoxy holds that central banks have abolished downturns and that AI will abolish scarcity.
This faith is seductive because it flatters both intellect and greed. It tells the speculator he is not gambling but investing in destiny. In truth, it is leverage masquerading as vision.
III. A Century Apart, the Same Dance
William Birdthistle, a former SEC official, recently invoked The Great Gatsby to describe a Halloween party at Mar-a-Lago, complete with champagne coupes and flappers.³ The symbolism was almost too perfect: a president celebrating the excess of the 1920s even as markets repeat their fatal choreography.
The 2020s, like the 1920s, are awash in speculative credit, democratized gambling platforms, and the comforting illusion that government supervision is an obstacle rather than a safeguard.
Birdthistle notes that the administration has gutted the regulatory architecture built after 1929—the very guardrails that turned American markets into the world’s deepest and most trusted. The SEC and CFTC, skeletal and demoralized, now preside over a carnival of crypto “rug pulls” and private-equity sales pitched to retirees. When the chaperones leave the ballroom, intoxication becomes policy.
IV. The Moral Mathematics of Mania
What connects these episodes—Babson in 1929, Hickey in 1999, and our own age—is not simply valuation but psychology. Markets inflate when memory deflates. Each generation must learn for itself that wealth cannot be printed or programmed at will. The speculative impulse, like original sin, is hereditary.
Galbraith once observed that during “the glorious process of enrichment,” prophets of loss are unwelcome guests. They remind revelers that progress has limits, that euphoria carries a price. Today, to question AI valuations or monetary excess is to invite ridicule—yet silence would be a greater dereliction. The duty of foresight is not to predict but to prepare.
V. Standing with Babson
I do not relish pessimism. But optimism without arithmetic is merely denial. As in 1929, as in 2000, as in 2008, the same logic of unsustainability is at work: too much credit chasing too few real opportunities. Artificial intelligence may well prove useful, but no algorithm has repealed the business cycle. What looks like genius in the ascent becomes leverage in the fall.
Babson’s warning was mocked because it spoiled the party. Yet he understood that economic gravity eventually asserts itself. When speculative air escapes, it does so not politely but explosively. Hickey’s quiet skepticism, Chancellor’s historical memory, and Birdthistle’s institutional alarm together form a contemporary trinity of prudence. Their common theme is not despair but responsibility—the belief that truth told early can mitigate pain later.
VI. The Duty to Speak
To prophesy loss is to care about what survives it. The aim is not to gloat when markets break, but to preserve trust when they do. In the aftermath of every collapse, we rediscover that value depends on honesty, regulation, and restraint—the unglamorous virtues forgotten in the boom.
On November 18, 2024, the “Cash as Trash—or King” essay was posted to my blog site. The subject was revisited on August 6, 2025. Cash, currently trash, could regain its luster when least expected. The only asset that retains its value in a crash is today’s trash. Buying tomorrow’s opportunities with tomorrow’s losses is apostasy, not prophecy.
History does not repeat, but its chorus grows louder as we ignore it. If the past is prologue, we may already be dangerously close to the end of the script. And if Roger Babson were alive today, he would likely be dismissed once more for saying what must be said: sooner or later, a crash is coming.
Endnotes
- Fred Hickey, quoted in Edward Chancellor, “An Even Bigger Bubble,” Reuters Breakingviews, Nov. 7, 2025.
- Edward Chancellor, The Price of Time (Allen Lane, 2022), and “An Even Bigger Bubble,” Reuters Breakingviews, Nov. 7, 2025.
- William A. Birdthistle, “Trump Is Pushing Us Toward a Crash. It Could Be 1929 All Over Again,” The New York Times, Nov. 7, 2025.