Is It ’29 Again?

From the Megamachine series · Signpost to the Megamachine

In a crash money does not lose its value. It changes hands.

I. The Shoeshine Boy

A story is told about Joseph Kennedy, father of the later president, from the summer of 1929. He has his shoes shined on Wall Street, and the boy gives him a stock tip. Kennedy goes home and sells. When even the shoeshine boys give tips, he is supposed to have said, there is no one left who could still buy.

Whether the story is true, nobody knows. It is told because it captures the pattern. A boom does not end when prices are too high. It ends when the last buyer has bought. And the last buyers almost always enter the market the same way: through new products that make access easy for them.

In 1929 there were two such things. One was buying shares on credit. You paid a small part yourself and the broker lent the rest. The other was the investment trusts, companies that collected the money of ordinary people and invested it in shares, often in shares of other trusts, often again on credit. The Goldman Sachs Trading Corporation was founded in December 1928; within weeks its share rose to more than double the issue price. Three years later it was worth almost nothing. The loss was borne not by the partners of Goldman Sachs but above all by the many small investors who had come in late.

II. Where the Money Goes

We like to imagine a crash as destruction: money vanishes into thin air. That is only half true. After the crash the factories are still standing, and so are the fields and the houses. What changes is who owns them.

In a crash those who must sell, sell. Whoever bought on credit has to pay up or give up. Whoever loses his job has to reach for his savings. And whoever must sell, sells at the worst price to whoever can wait. In the 1930s American farmers did not lose their farms because the land had become worse, but because they could no longer pay the instalments. The farms went to the banks and to those who had cash.

After its peak in September 1929, the American stock index took about twenty-five years to reach it again. Whoever bought in 1929 at fifty and held on was seventy-five at the recovery. Whoever had to sell in the crisis did not experience the recovery as an owner at all. Whoever could buy in 1932, on the other hand, made the deal of his life.

So a crash is not just a misfortune. It is a reallocation, from those who must to those who can. The more people without a cushion are brought into the market beforehand, the larger the mass that has to sell at the decisive moment.

III. The New Doors

Today doors are opening again, and one can watch for whom.

In October 2026 the World Gold Council, the gold industry’s association, had the Boston Consulting Group study how “digital gold” can be sold: claims on gold as tokens or in an app. The result is a “market potential” of 700 billion dollars. Two thirds of the hoped-for demand is to come from people who own no gold at all so far, above all 25- to 34-year-olds. The metal many buy precisely to be independent of the financial system is thus brought back into the financial system.

In the United States the president signed an order in August 2025 meant to open the way for private equity, private credit and crypto assets in employees’ retirement plans. It is called “Democratizing Access”. In April 2026 several American private credit funds suspended withdrawals because too many investors wanted their money back at once. We described this in “The Loop That Relocates Itself”. The big investors are looking for the exit from these hard-to-sell assets, and through the new door come the savers.

In Europe there are the ELTIF funds, which since 2024 have made such assets accessible to small investors too. And in Germany a bill has been before the Bundestag since 7 September: the “early-start pension”. From 2027 the state is to pay ten euros a month for every child between six and eighteen into a share depot. If parents choose nothing else, the Bundesbank invests the money broadly in shares.

Each of these doors has a justification of its own. Together they form a picture: a whole society is being brought into the markets, and precisely the parts that were outside so far.

IV. The Heralds

Every such movement has people who proclaim it. In 1929 they were radio programmes, newspaper columns and bankers. The famous economist Irving Fisher declared as late as October 1929 that prices had reached a “permanently high plateau”.

Today one of the loudest voices in Germany is Gabor Steingart. In July 2026 he announced a third ship for his media house, the “Pioneer Three”: more than forty million euros, eighty metres long, room for four hundred guests, moored in Frankfurt in front of the bank towers. With it came a financial-markets podcast at five in the morning on every trading day, spoken by an artificial voice that, in his words, “thinks, feels and sounds like me”. He calls the mission the “democratisation of capitalism”, and financial education the literacy of our time.

In “The Titanisation of the Confetti Cannon” we described what lies behind the word: the saver is not empowered but redirected, out of the pension fund into depots on which intermediaries earn fees. And in “Gloss on a Gloss” (German only: „Glosse einer Glosse“) we showed, with figures from a study by the asset manager Flossbach von Storch, where Germany’s lower middle class starts from: on average such a household holds shares worth about 1,200 euros. These are the people now being told they only need to learn to fish.

No one need be accused of bad intent. A herald need not be an accomplice. It is enough that he calls people into the market without asking which of them will still be on board in the storm.

V. Who Can Hold Out

The strongest argument for shares as retirement provision is: whoever holds on for twenty or thirty years gets over every crash. On average that is true. But who can hold on for twenty years?

Those who do not need the money can: sovereign funds, foundations, insurers, large fortunes. The Norwegian oil fund can wait thirty years because no one pulls at it.

The ordinary saver rarely can. Life does not keep to investment horizons. The job is lost, an illness comes, a divorce, a roof has to be redone. And these emergencies tend to come when prices fall, because the crisis on the stock market and the crisis on the labour market are usually the same crisis. Then there is fear. Studies have shown for decades that private investors do worse than the funds they are invested in, because they sell in the crash and come back only after the recovery.

And finally, “on average” is a comfort for statisticians. The Japanese stock index reached its peak in December 1989. It took thirty-four years to reach it again. Whoever bet on shares for retirement at forty back then did not live to see the recovery as a pensioner.

VI. What Must Be Said in Fairness

No one knows when a crash will come. In December 1996 the American central bank chairman Alan Greenspan warned of “irrational exuberance” on the stock markets. Prices then rose for more than three more years. Whoever sold back then was right and lost anyway. This essay therefore asks a question and makes no forecast.

Shares as part of retirement provision are no fraud either. Since 2000 Sweden has invested part of its pension contributions in a state equity fund and has done well with it. The early-start pension is expressly protected against forced selling, since the money stays locked until adulthood and is then meant to pass into retirement provision. The child cannot sell in the crash. Costs are capped at one per cent a year. That is sensibly done.

What remains is the weakness of every pension with a fixed date: if the day of payout falls into a crash, no amount of holding on helps.

VII. The Real Question

So the question is not whether shares are good or bad. The question is who has a cushion and who does not.

Whoever has reserves for half a year, a secure basic pension and no debts can put part of his money into shares and sit out a crash. Whoever has none of this becomes a seller at the decisive moment, and his loss is someone else’s gain. A policy that first calls people into the market and then sees to the cushion does things in the wrong order. In “The Structural Redistribution Between Generations” we described how burdens are passed downward and backward. A crash is the fastest way to do it.

In “Expropriation or the Next Raid?” we described the basic principle of business: buy cheap, sell dear. A crash is the same principle on a large scale. It works only if there are enough people who bought dear and must sell cheap.

Whether it is ’29 again, no one can say. One can only say who is opening the doors right now, and for whom. The question is not whether the next crash will come. The question is who will sell to whom this time.