From The Great Crash 1929 (1954) by John Kenneth Galbraith:
We do not know why a great speculative orgy occurred in 1928 and 1929. The long accepted explanation that credit was easy and so people were impelled to borrow money to buy common stocks on margin is obviously nonsense. On numerous occasions before and since credit has been easy, and there has been no speculation whatever. Furthermore, much of the 1928 and 1929 speculation occurred on money borrowed at interest rates which for years before, and in any period since, would have been considered exceptionally astringent. Money, by the ordinary tests, was tight in the late twenties.
Far more important than rate of interest and the supply of credit is the mood. Speculation on a large scale requires a pervasive sense of confidence and optimism and conviction that ordinary people were meant to be rich. People must also have faith in the good intentions and even in the benevolence of others, for it is by the agency of others that they will get rich. In 1929 Professor Dice observed: “The common folks believe in their leaders. We no longer look upon the captains of industry as magnified crooks. Have we not heard their voices over the radio? Are we not familiar with their thoughts, ambitions, and ideals as they have expressed them to us almost as a man talks to his friend?” Such a feeling of trust is essential for a boom. When people are cautious, questioning, misanthropic, suspicious, or mean, they are immune to speculative enthusiasms.
From “Rational gamblers: Gen Z, financial nihilism and the great wealth transfer” World Economic Forum, Mar 19, 2026:
Recent US college grads with $94,000 in debt are buying crypto and betting on prediction markets. Priced out of housing and with stagnant wages, Gen Z adults (aged 18 to 27) have done the math and the calculations say the traditional system isn’t working for them.
In 1990, the median American home cost 3.2 times the median household income. Today it costs 5 times the median income, and for someone aged 20-34, closer to 8 times their annual salary.
In the US, the median wage for a bachelor’s degree holder, when adjusted for inflation, has barely moved from $58,138 in 1990 to $60,000 today. The generation’s unemployment rate sits at 8.3%, which is double the national average. Although younger workers historically experience higher unemployment, today half of recent grads are underemployed and entry level jobs have declined by 35% in recent years.
People in this generation also carry more personal debt than any other – $94,101 on average – and 46% of Gen Z workers have already withdrawn from their retirement savings. The main reason for 42% of them was to pay down debt.
These Gen Zers couldn’t find a chapter for their situation in the conventional financial playbook, so they started writing their own.
The phrase “financial nihilism” describes the sense that the economic system no longer rewards prudence or long-term planning. It is shorthand for a generation’s apparently self-destructive relationship with money, which includes crypto bets, prediction markets and retirement accounts raided to pay off credit cards.
A recent University of Chicago and Northwestern University study offers a more precise frame. This research shows that, as someone’s perceived probability of homeownership falls, their behaviour often shifts. They consume more relative to their personal wealth and they also take a measurable turn toward riskier investments.
This shows up in the numbers. Crypto is held by 42% of Gen Z investors – nearly four times the 11% who hold a retirement account. Almost one in five investors under 30 surveyed in 2022 held nothing but cryptocurrency. Some estimates show prediction markets’ trading volume has quadrupled in the past few years, with nearly a third of Gen Z investors participating in them or considering it.
