The crash in 1929, however, did have one therapeutic effect: it, somewhat exceptionally, lingered in the financial memory. For the next quarter of a century securities markets were generally orderly and dull. Although this mood lasted longer than usual, financial history was not at an end. The commitment to Schumpeter’s mania was soon to be reasserted.

The Great Depression, the 1973 oil crisis, the rapid inflation of the late ’70s, the British sterling crisis of 1976, Black Monday in 1987, the dot-com bubble of 2000, the housing bust in 2008, the 28% drop in gold prices in 2013 — all of these surprises caught most investments professionals way off guard.

The Great Bubble ended on March 10, 2000 (though we didn’t realize that fact until some months later). On that day, the NASDAQ (recently 1,731) hit its all-time high of 5,132. That same day, Berkshire shares traded at $40,800, their lowest price since mid-1997.

. . . the bond bubble, the tech bubble, the stock bubble, the emerging markets bubble, the housing bubble. . . One by one they had all burst, and their bursting showed that they had been temporary solutions to long-term problems, maybe evasions of those problems, distractions. With so many bubbles-so many people chasing ephemera, all at the same time-it was clear that things were fundamentally not working.

In many ways the effect of the crash on embezzlement was more significant than on suicide. To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months, or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in — or more precisely not in — the country’s businesses and banks. 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. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.

…

Just as the boom accelerated the rate of growth, so the crash enormously advanced the rate of discovery. Within a few days, something close to a universal trust turned into something akin to universal suspicion. Audits were ordered. Strained or preoccupied behavior was noticed. Most important, the collapse in stock values made irredeemable the position of the employee who had embezzled to play the market. He now confessed.

As one 1935 study put it, boys and girls who were 15 or 16 in 1929 when the Depression began are no longer children; they are grown-ups – adults who had never, since they left school, had anything productive to do; adults in the embittered by years of suffering and hardship. The President's Advisory Commission on Education was to warn of a whole lost generation of young people.

"In the 1960's, some old-timers on Wall Street-the men who remembered the trauma of the 1929 Crash and the Great Depression-gave me a warning: "When we fade from this business, something will be lost. That is the memory of 1929." Because of that personal recollection, they said, they acted with more caution, than they otherwise might. Collectively, their generation provided an in-built brake on the wildest form of speculation, an insurance policy against financial excess and consequent catastrophe. Their memories provided a practical form of long-term dependence in the financial markets. Is it any wonder that in 1987 when most of those men were gone and their wisdom forgotten, the market encountered its first crash in nearly sixty years? Or that, two decades later, we would see the biggest bull market, and the worst bear market, in generations? Yet standard financial theory holds that, in modeling markets, all that matters is today's news and the expectations of tomorrow's news."

But do you know what happened during this period? Where do we begin ... 1.3 million Americans died while fighting nine major wars. Roughly 99.9% of all companies that were created went out of business. Four U.S. presidents were assassinated. 675,000 Americans died in a single year from a flu pandemic. 30 separate natural disasters killed at least 400 Americans each. 33 recessions lasted a cumulative 48 years. The number of forecasters who predicted any of those recessions rounds to zero. The stock market fell more than 10% from a recent high at least 102 times. Stocks lost a third of their value at least 12 times. Annual inflation exceeded 7% in 20 separate years. The words “economic pessimism” appeared in newspapers at least 29,000 times, according to Google.

The Depression is over.” In his December 2, 1930, message to Congress, he said that “the fundamental strength of the economy is unimpaired.

We had a bubble in housing.

It was the Depression because no white and no blacks were working. The whites not working made it official.

The public has a short memory. That's why all these big stars do these crazy, terrible things and two years later they're back in the biz, you know. 'Cause the public has a short memory. Let me give you a little test, okay? This is my thesis — the public has a short memory and, like — How many people remember, a couple of years ago, when the Earth blew up? How many people? See? So few people remember. And you would think that something like that, people would remember. But NOOO! You don't remember that? The Earth blew up and was completely destroyed? And we escaped to this planet on the giant Space Ark? Where have you people been? And the government decided not to tell the stupider people 'cause they thought that it might affect — [dawning realization, looks around] Ohhhh! Okay! Uh, let's move on!

"The first ten million years were the worst," said Marvin, "and the second ten million years, they were the worst too. The third ten million years I didn't enjoy at all. After that I went into a bit of a decline."

Remember this: however bad you think things are today, however awful you consider our leaders to be, however stupid you think your fellow Americans are, this country has seen worse times, including - to name a few - the Civil War, 9/11, the Great Depression, and six seasons of <i>Jersey Shore</i>. We muddled through those times. We will muddle through these.