A Template for Understanding Big Debt Crises

by Ray Dalio

Following the world war and the recession of 1920 to 1921, the US economy experienced a period of rapid technology-led growth. The continuing electrification of rural and small-town America and the growth of the middle class opened up huge markets for new technologies. The radio was the new, hot technology and the number of radio sets owned grew from 60,000 in 1922 to 7.5 million in 1928.1 The automobile industry also grew rapidly and by 1929 there were 23 million cars on the road—on average, about one per every five Americans (which was nearly three times higher than in 1920).2