Short pieces on the people, accidents, and decisions behind what you see in the timelines. The 1637 tulip market was smaller than its legend. Isaac Newton kept losing money after he got out early. J.P. Morgan ran America’s 1907 bailout from his library. A Franciscan friar in 1494 wrote the book every accountant still uses. A new one goes up every day.
By summer 1981 the Federal Funds Rate was near 20 percent, unemployment was climbing, and Congress was openly threatening Paul Volcker's job. He held the line. The harder counterfactual is the one where he did not.
By August 1971 foreign dollar holdings were roughly four times US gold reserves. A run on Fort Knox was a credible scenario by year end. Nixon's Sunday-night announcement was the politically loud way to break the system. The quieter path would have broken something larger.
On September 23, 1998, William McDonough locked fourteen bank CEOs in a room at the New York Fed and did not let them leave until they had agreed to recapitalize a failing hedge fund. The case for letting it die instead is stronger than the rescue's defenders admit.
On August 24, 1857, a single trust company failed in Cincinnati. By the end of the day the news was on every East Coast trading desk by telegraph. By October it had reached London, Hamburg, and Liverpool. The first crash where information moved faster than rumor.
Long-Term Capital Management had the best quants on Wall Street and a trading model that had never lost money. In September 1998 it needed a Fed-orchestrated rescue to avoid taking the global banking system down with it.
In November 1923 a loaf of bread in Berlin cost 200 billion marks, up from a few marks two years earlier. Workers were paid twice a day because the afternoon wage was worthless by evening. How does a functioning economy lose its money this completely in 18 months?