The explanation of the 1920s boom emphasizes loans and speculation that future conditions would keep improving. Confidence allowed borrowers to promise repayment from tomorrow's prosperity. Once lenders doubted that forecast, they had an incentive to recover their money while repayment was still possible. Withdrawals could then undermine the confidence on which other loans depended. The comparison with the London treaty concerns decisions that assumed continued improvement and left little room for setbacks.
Notable Point · 1:24:13-1:26:22
Credit, confidence, and the interwar boom
Borrowing against expected prosperity made the interwar boom vulnerable to doubts about repayment and a widening loss of confidence.