• Brett Schafer

A History of Financial Markets: Season 2



Listen On:


  1. Spotify

  2. Apple Podcasts


Overview


Welcome to a History of Financial Markets, Season 2. If you're new to the show/page, make sure to follow us on Spotify/Apple (links above) to get updates on our future seasons/episodes. In season 2, we cover the period after the Panic of 1907 up to the start of the Roaring '20s in the United States. The big events of this period, and what we spend the most time talking about, are the founding of the Federal Reserve, the break-up of Standard Oil, and the Depression of 1920 - 1921. We are not historians or economists but hope to offer an easy-to-understand format of our financial world and how we got to where we are today.


Episode 1: The Creation of the Federal Reserve



On the first episode of Season 2, we pick up where we left off, with the U.S. government wanting to create a central banking system after the debacle of 1907. From 1907 - 1913, officials traveled to Europe and tried to figure out what the best system would be for America, leading to the Federal Reserve Act being passed on December 23, 1913. During the episode, we discuss the founding timeline of the Federal Reserve and the basic functions of how the system works.


Episode 2: The Interpretation of the Federal Reserve Act


On episode 2, we delve into more of the Federal Reserve system and the tests it went through in its early years. Topics include:

  • The unanticipated war that shook up the world (WWI)

  • Frequent conflicts between the Federal Reserve board and the banks

  • Rapid inflation that happened during the 1910s

  • How early officials interpreted the Federal Reserve Act

  • What are open market operations? (i.e. Quantitative Easing)

Episode 3: The Break-up of Standard Oil


On episode 3, we change topics to the most powerful company in the United States at the time: Standard Oil. The show gives an overview of why the company got broken up by the government. Topics include:

  • Rockefeller's rise to power

  • Public pressure mounted against Standard Oil

  • The specific causes for the Standard Oil break up

  • What happened after the break-up


Episode 4: The Great Depression...Of 1920?


To close out Season 2, we explored the little-known financial depression that happened in 1920 and 1921. Episode 4 goes through the lead-up to the depression and some of the reasons why it happened. Topics include:

  • Fast facts of the depression

  • Context around WWI

  • Wild swings in commodity prices

  • The rapid inflation that turned into deflation


Episode 5: A Vicious, Deflationary Depression


Episode 5 of Season 2 covers the depths of the 1920 - 1921 depression and how a deflationary spiral can have a severely negative impact on an economy. Topics include:

  • The terrible year of 1920

  • The relationship between deflation and wages

  • Government spending potentially playing a role

  • How different lending institutions weathered the storm


Episode 6: The End of the 1920/21 Depression and the Start of the Roaring '20s


The last episode of Season 2 covers the end of the 1921 depression and the start of the roaring '20s, which would last until 1929 and the start of the Great Depression. Topics include:

  • The September 16 bombing of Wall Street

  • Coming out of the depression

  • Amazing investment opportunities at the bottom of the cycle


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Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.

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