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Liaquat Ahamed on the Railroad Bubble That Crashed the World | #642
Today’s guest is Liaquat Ahamed, the Pulitzer Prize–winning author of Lords of Finance: The Bankers Who Broke the World, one of the greatest financial history books ever written. His new book is called 1873: The Rothschilds, the First Great Depression, and the Making of the Modern World. In today’s episode, Liaquat shares the story of the world’s first truly global financial crisis. He walks through the Rothschild-led bond boom that funded railroads on three continents, the German IPO mania sparked by French war reparations, and the monetary blunder of abandoning silver that turned a crash into twenty years of deflation.
Key Points
- The global financial crisis of 1873 was driven by a combination of railroad defaults in the US, excessive bond investments by countries like Egypt and Turkey, and a collapse in silver prices.
- The transition from a bimetallic standard of gold and silver to a gold-only standard after 1873 caused a severe deflation that led to economic and political turmoil, particularly affecting the US with a twenty-year deflationary period.
- The financial crisis and subsequent deflation led to the rise of populist movements and conspiracy theories, with significant social and political repercussions, including a resurgence of antisemitism and a fragmented political landscape in the US.
Chapters
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Transcript
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