America has had a lot of recessions, depressions, and financial crises. Every country has of course, but since America has been the world’s largest economy for well over 100 years, ours get more press and reverberate more strongly throughout the world. But the crash of 1987 is one that I rarely see talked about, and I thought that was with good reason. On October 19th 1987, stock prices worldwide crashed by double digits in a single day. But the effects on the wider economy were not so severe, and the US economy still grew by 3.5% that year.

The Crash of 1987 is a good reminder that the stock market is not identical to the “real” economy. Now, they are not wholly diverged either, and if stock prices crash companies will find it harder to use their stock to finance expansion. But they aren’t tightly coupled and the Crash of 1987 is one of the many events that proves it. However I’m reading a book now called “The Decline and Crash of the American Economy” that appears to posit more from 1987 than was warranted.

The author, Joel Kurtzman, tells you his thesis on the cover of the book, and the inside jacket makes special note of how 1987 heralded deep problems that would not be fixed without his preferred policies being implemented. But Kurtzman is basically a left-protectionist who blames Nixon and Reagan for ending the gold standard/Bretton Woods and liberalizing American trade. Kurtzman’s policies were by no means implemented, but the 90s were hardly a decline and crash by anyone’s definition. It feels to me like Kurtzman had a thesis already in place, and simply used the crash of 1987 as ex post facto proof of what he already believed.

I’ll try to write more about this book in the coming days, but I don’t think 1987 was an important as Kurtzman thinks.