Part 2: The 'Credit Revolution' That Created the Bubble
— The 1929 Individual Investor Boom and the Modern Unicorn Economy
In today's world, you can easily invest in stocks with a smartphone.
While the AI boom drives the market and we fret over interest rate trends, new forms of 'credit' are emerging right under our feet.
Leveraged ETFs, BNPL (Buy Now, Pay Later) services, smartphone brokerage apps...
These are all forms of 'new debt' that have expanded under the guise of the 'democratization of finance'.
However, about 100 years ago in 1929, the exact same 'financial revolution' was taking place.
An era arrived where anyone could become an investor, and—waiting just beyond that—was the 'Great Depression'.
Chapter 1: '10x Leverage' and Modern Margin Trading
Charles Mitchell, a man called 'Sunshine Charlie' in 1920s America.
As the president of National City Bank (now Citibank), he popularized **margin trading (collateralized trading)** for general investors.
You could purchase stocks with only 10% margin—in other words, 10x leverage.
With $100 in capital, you could buy $1,000 worth of stock.
This 'financial innovation' was revolutionary for its time.
The number of individual investors exploded, and speculation through debt became the norm.
Even today, smartphone apps like Robinhood and products like 3x bull ETFs play the same role.
Access to finance has been democratized, but at the same time, an environment where 'anyone can take on debt' has been established.
Technology lowers the barrier to entry, allowing anyone to easily use leverage.
That remains unchanged between 1929 and 2025.
Chapter 2: 'Installment Investing' and the Modern BNPL Economy
August 1929, just two months before the Great Crash.
GM treasurer John Raskob proposed this in a magazine:
'Everyone can be rich by saving $15 a month'
This 'installment investing' applied the installment payment method of auto loans to stock investing.
In other words, it was the generalization of a system to 'borrow money to buy stocks'.
A modern version of Raskob's idea is BNPL (Buy Now, Pay Later) services.
'Buy now, pay later'—while this mechanism is convenient, it increases invisible debt.
Especially in the U.S., about 40% of those with low creditworthiness use BNPL, and delinquency rates among the younger generation are also on the rise.
These debts are difficult to reflect in traditional credit scores, making the actual risks hard to see.
The optimism of 'paying later' always fosters bubbles in any era.
Chapter 3: 1920s 'Investment Trusts' and Modern 'Unicorns'
In the late 1920s, a 'corporate investment trust' boom occurred in America.
Through a 'nested structure' where funds invested in each other, leverage was amplified many times over.
The prime example is Goldman Sachs Trading Corporation.
By 1932, its value had plummeted to 1/35th of its value at the time of establishment just three years prior.
The same structure exists today.
Giant funds pour massive amounts of capital into startups, inflating their valuations—this is the unicorn economy.
SoftBank Vision Fund's investment in WeWork is symbolic.
In 2019, its valuation plummeted from $47 billion to $8 billion following the postponement of its IPO.
'Rising valuations' are often supported by 'expectations' rather than 'actual performance'.
Chapter 4: Behind the Beautiful Name of 'Financial Democratization'
Whether in the 1920s or the 2020s, the catchphrase is the same:
'Anyone can become an investor'.
However, if there is a gap in financial literacy (knowledge), expanding access will create a redistribution of losses, not a redistribution of wealth.
Game-like apps, commission-free services.
Behind the seemingly user-friendly design, risk is being shifted onto individuals.
'Financial democratization' is, in fact, also 'risk democratization'.
[1929 vs 2025] Comparing the structure of credit expansion
When organized for clarity, the following 'mirror image relationship' emerges.
💥 Proliferation of high-leverage trading
1920s: 10x margin trading becomes mainstream
2025: Anyone can enter with small amounts via leveraged ETFs or FX
💳 Expansion of installment and deferred payments
1920s: Installment investing (buying stocks on credit)
2025: BNPL (Buy Now, Pay Later) services to postpone consumption
🏢 Concentration and inflation of capital
1920s: Mutual investment in investment trusts (fund-of-funds)
2025: Unicorn investment by massive VCs and overvaluation
📱 Access revolution
1920s: Orders via telephone and counters
2025: One tap on a smartphone, zero fees
The only difference between 100 years ago and today is the speed of technology.
The 'structure that expands credit' has remained surprisingly unchanged.
Chapter 5: The essence of the 'Credit Revolution' as taught by history
Credit (debt) is the driving force of economic growth and, at the same time, the fuel for bubbles.
In both the 1920s and the 2020s, financial democratization created a 'society where everyone can use leverage'.
The problem is the increase in people using that leverage without understanding it.
What should be feared is not 'credit itself,' but the 'invisibility of credit'.
Invisible risk is the most dangerous debt of all.
Conclusion: 'Finance as Wisdom'
The essence of credit is not the 'power to believe,' but the 'power to foresee'.
The true danger of a bubble is not the amount of debt, but the lack of awareness of that debt.
The ability to see through the risks hidden behind convenience is the greatest asset for surviving the next era.
Next time (Part 3), we will delve into 'The Mechanism of Bubble Bursts: The Chain Reaction of Debt, Currency, and Central Banks'.
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