Yves here. James Galbraith provides an intriguing analysis of what he depicts as the driver of the Great Crash, that of huge oil discoveries that were set to greatly lower oil and gas prices and accelerate the displacement of coal.

I have problems with this thesis. The big announcements were too close in time, a mere few days, to the great price plunge and it would have taken some time for the impact of this announcement to be digested and analyzed. In 1987, the Brady Commission found it took about ten days for the floating of a Treasury Department proposal to put a tax surcharge on borrowings on highly leveraged transactions to reverberate back to stock. Treasuries had also gotten wobbly due to bad trade deficit news.

However, Galbraith does turn to an AI economics unwind at the likely trigger of the much-expected crash. Honestly, AI’s money math so obviously never will work out that I remain mystified as to why the bustup hasn’t already happened.

By James K. Galbraith, Lloyd M. Bentsen Jr.…