Fortune 3 August 2026
"There seems little question that in 1929 the economy was fundamentally unsound. This is a circumstance of first-rate importance. In 1929 the rich were indubitable rich. The figures are not entirely satisfactory, but it seems certain that the five per cent of the population with the highest incomes in that year received approximately one-third of all income.
This highly unequal income distribution meant that the economy was dependent on a high level of investment or a high level of luxury consumer spending or both. The rich cannot buy great quantities of bread. If they are to dispose of what they receive it must be on luxuries or by way of investment in new plants and new projects. Both investment and luxury spending are subject, inevitably, to more erratic influences and to wider fluctuations than the bread and rent outlays of the $25-week workman. This high bracket spending and investment was especially susceptible, one may assume, to the crushing news from the stock market in October 1929."
John Kenneth Galbraith, The Great Crash of 1929, 1955
"Hoover quickly developed a reputation as uncaring. He cut unemployment figures that reached his desk, eliminating those he thought were only temporarily jobless and not seriously looking for work. In June 1930, a delegation came to see him to request a federal public works program. Hoover responded to them by saying, 'Gentlemen, you have come sixty days too late. The Depression is over.' He insisted that 'nobody is actually starving' and that 'the hoboes are better fed than they have ever been.' He claimed that the vendors selling apples on street corners had 'left their jobs for the more profitable one of selling apples.'
'There are some principles that cannot be compromised,' Hoover remarked in 1936. "Either we shall have a society based upon ordered liberty and the initiative of the individual, or we shall have a planned society that means dictation no matter what you call it. There is no half-way ground.' He was convinced that the economy would fix itself."
Digital History, Herbert Hoover, 2021
“Thanks to the tax cuts we passed, Americans’ paychecks are a little bigger today. Every business can write off the full cost of the new investments they make this year. These steps will grow the economy.”
Herbert Hoover, Campaign Speech, Detroit, October 22, 1932
"In his memoirs, Hoover describes a 'leave it alone' school of thought headed by Treasury Secretary Andrew Mellon, who advocated allowing the economic slump to run its course. Mellon believed in a harsh restructuring, famously stating 'Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.'"
Herbert Hoover, Memoirs of Herbert Hoover, 1952
"J. P. Morgan and Andrew Mellon made their billions through inter locking directorates and outright ownership of hundreds of nationally prominent enterprises. Glass-Steagall is one crucial piece of a litany of legislation designed to place checks and balances on the concentration of financial resources. To repeal it would be tantamount to bringing back the days of the robber barons."
Mark D. Samber, End Bank Law and Robber Barons Ride Again, NY Times, March 5, 1995
"The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellows hands.”
Will Rogers, Weekly Column, St. Petersburg Times, Nov 26, 1932
The rumors spread about an imminent deal with Iran by high ranking officials of the government, including the cleverly worded statement by Treasury Secretary Scott Bessent, were greatly exaggerated.
But it did provide the opportunity to once again crush the price of crude oil to a price that, from what I hear and see, is not available for actual physical delivery just about anywhere.
There seems to be a lot of that going around these days. Such are the times, and the purposeful fog of war.
There were missiles flying and tankers sinking today. If you did not know this and the recent announcement from Iran on the Strait of Hormuz then you may wish to find another source of news - or be content to operate on faulty information.
So we had quite the pop and flop in stocks day, with new highs fading quickly into the red as the false underpinnings of the rally faded.
Ok, so the reckoning with oil supply is likely to become more noticeable in a few weeks. But the general deterioration of the economy and the nature of the AI tech bubble is very apparent.
Gold and silver rallied sharply. Before I draw too many strong conclusions about this I want to see how they perform through the Non-Farm Payrolls report this Friday, a traditional event for metals smashing.
SpaceX popped and then flopped back to the distribution trendline. There are more shares coming out of 'lockup' in the near term than were issued at the time of the IPO.
But the problem is really that the underpinnings of the AI tech rally are just not sustainable or even realistic. It seems to be a classic 'new era' stock bubble.
Ray Dalio and Michael Burry see this. With well-deserved humility I see it as well.
I am fairly convinced that there is going to be a reckoning of memorable proportions later this year, on a scale with other significant financial adjustment events of the past as Dalio indicates.
The power elite are feeling good, and giddy with success.
If there are damned souls in Hell, it is because men blind themselves.
Have a pleasant evening.
