In 1918-1920, the world experienced the Great Influenza Pandemic, which, in the U.S. alone, took 675,000 lives and sidelined the economy. Yet what followed those dark years was a time of great prosperity in the U.S.: the Roaring Twenties, made famous by F. Scott Fitzgerald’s novels and romanticized today through movies, Art Deco ardor, and countless Halloween flapper costumes.
Can we expect a similar shift in fortunes in the post-pandemic 2020s, causing a modern-day roaring twenties? And what does that mean for Bitcoin? Let’s find out.
Did the Roaring Twenties Really Roar?
Little-known fact: Our modern-day perspective of the 1920s is skewed. Many of us envision lavish parties, free-flowing champagne, and chic, bobbed hair. And while all of this was part of the decade, it wasn’t exactly the norm. Many upper-middle-class Americans did cut loose and enjoy themselves during this time, but the working class, and immigrants especially, kept on working.
Still, the 1920s was indeed a time of economic growth–in fact, the U.S. economy experienced an uptick of 42%. It was also the decade of the Second Industrial Revolution when wide-spread access to electricity and the introduction of the assembly line prompted a manufacturing boom. The Roaring Twenties began a U.S. consumer culture that’s still alive today.
The 1918 Pandemic and the Roaring Twenties
While the Roaring Twenties came on the heels of a pandemic, it also followed the end of World War I, then called the Great War. Many historians attribute the end of the war as the bigger contributor to the freewheeling 1920s. Widespread social change in the U.S. also fueled the decade. In 1920, the 18th and 19th amendments both passed. The former banned alcohol (which mostly encouraged its consumption), and the latter gave women the right to vote.
Strangely, the 1918 pandemic wasn’t well-recorded, so it’s difficult to link it to the Roaring Twenties. But Yale sociologist and physician Nicholas Christakis notes a pattern in pandemics that goes back to the 1348 Black Death plague. Pandemics are times of risk aversion and financial frugality, and the period that follows is often the opposite. Even the Black Death was followed by a time of high spirits, spending, and gambling.
All this is to say, the pandemic may have been one element that brought about the Roaring Twenties, but there were many more, perhaps larger, elements also in play.
Can We Expect Post-Pandemic Prosperity?
Expectations are often problematic, so check those in general. That said, many historians believe we could enter a prosperous period, though not necessarily because of the pandemic.
Many of the other elements leading to the Roaring Twenties are present today, including major innovation and social unrest. The 1920s had the Second Industrial Revolution. The 2020s will be the age of the artificial intelligence revolution, according to Alex Horenstein, assistant professor of economics at the Miami Herbert Business School. The 1920s left behind war and ushered in an age of innovation and newfound freedoms for American women. Our modern-day world too has changed drastically: Many of us work from home; children learn remotely through video conference; and many of our regular purchases are now delivered, to name just a few lifestyle changes brought on by the pandemic. The combination of technology and liberating social shifts often encourages spending–and a better economy in general.
How Does Cryptocurrency Relate to a Modern-day Roaring Twenties?
Let’s look at investing patterns to tease out cryptocurrency expectations.
In the 1920s, investing in stocks became a “mania,” according to economic historian Charles Kindleberger. (Fair warning: Many believe Americans investing money they didn’t have by buying stocks “on margin” contributed to the Great Depression. So don’t invest money you don’t have! That said, economic scholar Brian Domitrovic believes it wasn’t the market system but the U.S. government that was at fault for the Great Depression.) In general, the frugality of pandemic wartimes followed by a stronger 1920s economy translated into Americans saving for potential less-prosperous times like the one they had just experienced.
Cut to today’s investing uptick indicated by a January 2021 survey that found almost 60% of the 40-and-below population are investors thanks to easy access to information online, investing apps, and side-hustle mindsets. Yet Generation Z is forgoing traditional stocks as investments and gravitating toward luxury items and cryptocurrency as investments. Could these be the latest mania? At the very least, it’s fuel for a healthier economy.
Perhaps we should view Bitcoin as not only a barometer of economic optimism but also as a source of it. After all, what is cryptocurrency if not a product of our very real desire to create and control our own fortunes?