Abstract

There are significant parallels between the Roaring Twenties and the Bullish Eighties. Both decades were characterized by a policy‐induced artificial boom that ended with an inevitable bust. The Federal Reserve had a hand in both episodes, keeping the interest rate artificially low in the first one and keeping Treasury bills artificially risk‐free in the second. Comparing the two episodes in terms of Federal Reserve policy, federal government borrowing, and the regulatory environment faced by the banking community accounts for both similarities and differences between the economic realities of the 1990s and those of the 1930s.