The 7-Stage Pattern That Destroyed 89% of Wealth in 1929 — and We’re in Stage 5 Now

Описание: Here's a deeply researched, compelling description for your 1929 script:

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October 29th, 1929. Black Tuesday. The Dow Jones lost 12% in a single day—16 million shares traded in panic. But the crash didn't start that Tuesday. It started years earlier, following a seven-stage mathematical pattern that has destroyed wealth three times in modern history: 1929, 1989 Japan, and 2008 globally.
This isn't a history lesson. It's a blueprint.
THE SEVEN STAGES:
Stage 1 - Easy Credit (1921-1927): The Federal Reserve slashed rates to 3% after the 1920-21 recession. Margin lending exploded from $1 billion to $8.5 billion—equal to 8% of U.S. GDP. Brokers lent at 90% leverage. Investors controlled $10,000 in stocks with just $1,000 down.
Stage 2 - Speculation Replaces Investment (1927-1928): Investment trusts—the 1920s version of leveraged ETFs—raised $8 billion. Goldman Sachs Trading Corporation launched in December 1928, raising $100 million. They created nested trusts: Goldman invested in Shenandoah Corporation, which invested in Blue Ridge Corporation. Leverage stacked on leverage. RCA stock rose 570% in 18 months despite earnings growing just 30%.
Stage 3 - Smart Money Exits (Summer 1929): Joseph Kennedy liquidated his positions and built short positions months before the crash. Bernard Baruch converted to cash and government bonds by August. European banks quietly sold U.S. holdings throughout September. Corporate insiders dumped record amounts of their own companies' stock while publicly proclaiming strength. The call money market—where brokers borrowed to lend to speculators—hit 20% interest rates for overnight loans.
Stage 4 - Peak Valuations & New Era Thinking (September 3, 1929): The Dow hit 381.17—a level it wouldn't reach again until 1954. Average P/E ratios reached 32.6x. Irving Fisher, Yale's most respected economist, declared on October 17th: "Stock prices have reached what looks like a permanently high plateau." Corporate earnings had already peaked in Q2 1929, but stocks climbed another three months, completely disconnected from reality.
Stage 5 - The Crack (October 24-29, 1929): Thursday, October 24th—the market fell 11%. Margin calls flooded out. Forced liquidation began. The ticker tape ran 2.5 hours behind. JP Morgan, Chase, and National City Bank formed a consortium to stabilize markets. It worked for four hours. Monday, October 28th: Dow fell 13%. Black Tuesday, October 29th: Another 12% gone. 16 million shares traded—a record that stood for decades.
Stage 6 - The Cascade (1930-1932): The crash triggered cascading failures across the entire system. Over 10,000 banks failed between 1930-1933—half the banking system eliminated. No FDIC existed. Depositors lost everything. Goldman Sachs Trading Corporation, which traded at $326, fell to $1.75—a 99.5% loss. Debt deflation took hold: as prices fell 25%, the real burden of debt doubled. Farmers, businesses, and homeowners defaulted in waves. By 1933, unemployment hit 25%. Industrial production fell 47%. The Dow bottomed at 41—an 89% decline from peak.
Stage 7 - The Aftermath (1933-1945): An entire decade lost. The economy didn't truly recover until World War II forced massive industrial mobilization. FDR took America off the gold standard in 1933—essentially a sovereign default. Social Security, FDIC, SEC, and unemployment insurance were created as emergency measures to prevent societal collapse. In Germany, economic catastrophe helped bring Hitler to power in 1933.
NOW - 2025:
Stage 1 ✓: Federal Reserve held rates at zero from 2008-2022. $8 trillion printed through QE. Global debt exceeds $315 trillion—three times global GDP. Corporate debt jumped from $7T to $12T, mostly for buybacks, not investment.
Stage 2 ✓: Meme stocks (GameStop, AMC), NFTs selling for millions, SPACs raising billions with no business plan, crypto market caps in the trillions. Tesla's market cap exceeded all other automakers combined despite producing a fraction of the vehicles. Companies with zero profits trading at 50-100x revenue.
Stage 3 ✓: Warren Buffett holds $325 billion in cash—the most in Berkshire's history. Corporate insiders selling at record levels. Hedge funds building the largest short positions ever recorded. Foreign central banks buying gold instead of U.S. Treasuries—a vote of no confidence.
Stage 4 ✓: "This time is different" because of AI, digital transformation, blockchain. Valuations disconnected from fundamentals, justified by narratives about future disruption. Any skepticism dismissed as "old paradigm thinking."
Stage 5 ← WE ARE HERE: The moment before the crack. Peak leverage, peak confidence, peak complacency. Waiting for the trigger that forces the first wave of liquidations.

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