Finally, for day 6 of this week, a history lesson on bubbles as seen through a rear-view mirror. The current surge in artificial intelligence (A.I.) investment on Wall Street has sparked both excitement and concern, drawing parallels to the infamous stock-market crash of 1929. That historic crash was not a sudden event but the beginning of a prolonged decline lasting nearly three years, culminating in the Great Depression. It was fueled by speculative frenzy, excessive borrowing, and a widespread disregard for traditional valuation measures, leading to catastrophic wealth destruction and human suffering. Today’s A.I. boom shares many of these hallmarks: soaring stock valuations, speculative enthusiasm, and complex financing schemes that some experts fear could mask deeper risks.

In the late 1920s, new technologies like commercial radio captivated investors, much as A.I. captivates markets now. Stocks in companies like the Radio Corporation of America skyrocketed, driven more by optimism and fear of missing out than by solid fundamentals. Similarly, the current market sees tech giants and chipmakers like Nvidia at the center of a frenzy, with massive investments betting on future growth that has yet to fully materialize. While some analysts argue that today’s rise is grounded in genuine growth potential, others warn of echoes from past bubbles, including questionable financial practices and outright fraud.

The 1929 crash also revealed the darker side of speculative booms, exposing widespread “bezzle” — fraudulent accounting, embezzlement, and self-dealing among financial elites. Figures like Albert Wiggin and Richard Whitney, once respected leaders, were later disgraced for unethical behavior. Yet, the broader lesson is that speculative manias tend to warp judgment across all levels of the economy, from small investors to major institutions.

Moreover, the current boom has extended beyond stocks into opaque credit markets, with private lending by non-bank entities growing rapidly. Recent collapses of highly leveraged companies, involving billions in vanished collateral, have raised alarms about hidden vulnerabilities that could trigger wider fallout.

The aftermath of the 1929 crash led to significant reforms, including the creation of the Securities and Exchange Commission and the Glass-Steagall Act, which reshaped American financial capitalism for decades. Today, as the A.I. boom unfolds amid warnings from financial leaders about a potential market correction, the lessons of 1929 serve as a cautionary tale. While technology promises transformative change, unchecked speculation and financial excess risk repeating history’s painful mistakes, reminding us that every great crisis exposes the hidden fragilities beneath the surface of booming markets.