Comparing the Great Depression to today

Quote from Debaser82:Now forget about comparing the Dow it's performance to the $ of 2000 why not track back and see where the DOW today would be in 1990 $'s.

Could it be the last 3 decades contained few to no real economic growth and it was all money printing or is this just crazy goldbug talk?
More...
Did you look at the actual numbers, 1990 till today?

The SP500 (price index, without dividends) is up 280% from 1990 -- that's 5.7% annualized, beating CPI inflation. The Dollar Index is down a "horrendous" (as the gold bugs say) 14% over the same 19 year time period, still allowing for a solid capital gain even if you invested from aboard without hedging your currency risk.

If you factor in dividends (~2% a year?) that's another 45% of performance over 19 years. Factor in taxes (30%) and make that for a net effect of a still substantial 31.5%.

During the same time period (without dividends), the Philly Gold Bug Stock Index gained.... tadaaaa... an amazing 25%, making for an annualized 1.18% gain, handily underperforming CPI inflation. Factor in the US Dollar index losses and foreign gold bugs have been eaten alive by inflation and currency losses.

Doesn't mean the picture can't reverse for the next 19 years, just making a point about the past.
 
The world, is in a recession.Most media outlets and politicians are calling today’s financial troubles the worst crisis since the Great Depression.Everywhere, people are saying that the sky is falling.
Comparing today’s situation to the Great Depression is like comparing World War II to the Gulf War. We should not refer to the Great Depression to justify government discussion in today’s economy. The comparison simply is not appropriate.
 
Thought I put up some inflationary indicators. Wsj suggests that inflation trends have weakened:

yoycpi.gif


service.gif
 
Quote from monty21:

Thanks for posting...

The 20% rally in equities and 20% decline in the U.S. dollar is more of a hypothetical example (that is actually occurring). This concept was raised by Jim Rogers who said that the S&P can go back to 1,500 but what does it mean if the dollar crashes with it.

And as with your Euro example, the dollar has been weakening against many other currencies. I posted this chart earlier but may be helpful again:

currency-small1.jpg


The issue you raise about the Dow and essentially buying it for free is a tough question for me to answer. Personally I wouldn't say it is "free" considering it takes capital to invest.... capital you could invest/store elsewhere. In another sense, this is your opportunity cost. So nothing seems "free".

But yes, the FED has been printing money excessively and we face the potential of a severe inflation... just like Japan. Look up any chart on the money supply. The system of fractional-reserve banking also contributes to the problem because banks essentially create money out of thin air every time they make a loan.

This topic, however, is an issue of ideology. There is no right or wrong answer or solution. There is a school of thought that believes that the activities of the FED and the fractional-reserve system are beneficial for our economy. Then there are critiques like myself (mesh of Austrian/Chicago school) who claim this will cause a huge bubble. Returning to the gold standard is the solution of the Chicago school. No one can be certain they are right.

Oh btw... don't listen to economists. If economists could be right 50% of the time and speculated in the financial markets, they would be billionaires. Even if they adhere to Efficient Market Hypothesis they can still make long-term forecasts.
More...


Yes.

Why such basics are misunderstood?

What was the reason for fractional reserve banking in the very very first place? Back then it did not even have a special/fancy name. It was planly a dishonest banking.

Why what was called cheating before has a fancy name now? Oh, I see - has happend historically, and we have to deal with it now. But then why make a science of it?

Same with fiat carrencies.

Before, dilluting gold coins was called cheating.
Now, there is no more coins, there is paper, and they play funny games with it.

....

Finally, for a joke. I found few 20 Pound bills in my passport. Do you know what is written on them?

"I promise to pay the beared on demand the sum of 20 pounds"

:):):)

w/o "in Gold" this statement makes no sense.
 
I had a theory a long while back that I have used ever since to guide what I do in the markets. The theory is:

1 - Reagan reintroduced the world to the markets.
2 - The right would peak in 2008.

That 2nd was a bit off, the right apparently having peaked in 2004.
The 1st is still being proved true. If the markets are in charge, as they were prior to the New Deal, then what you could expect is a Very Ugly End to the era of market dominance, similar to how the previous era of market dominance ended, with a massive crash and financial crisis. Which is what we're witnessing right now.
This thread is interesting from the POV of the truly extraordinary denial of the simple truths that

1 - This is how it always ends when you let the markets go wild, and
2 - The Left is nowhere near done with reintroducing regulation to the markets.

Obama, despite what you guys evidently believe, is not the resurrection of FDR. That person is out there somewhere, but if the normal political cycle continues, none of us will know who that person is until the elections of 2024, assuming we're still around that year to see it. Obama is more like Nixon. Nixon was the first truly right-wing President the nation had had since FDR. Obama is the first truly left-wing Prez we've had since Reagan, and obviously the experience is disorienting to the younger folks who never went through the Sixties, in the same way as Nixon was disorienting to folks who'd never seen Harding & Coolidge in action. Watergate was just Teapot Dome, all over again, and was just an appetizer to Reagan's outright treason as an agent of the mullahs of Iran.
Believe me: in the Sixties, Obama would have been seen for the phony leftist he in fact is.
In the Great Depression, the head of the NYSE was packed off to jail. Nothing like that is happening now. Something like that will happen, but not in this Admin. If you live long enough, you'll get to see its equivalent. Not to mention that you'll get to see the truly modern version of FDR.
Obama ain't it. Not by a long shot. His "reform" package, announced today, is so timid it's laughable. As have been all his actions in response to this crisis so far.
Luckily for him, it won't matter, because this is just the appetizer, and there will be a very nice recovery from this, because there's still plenty of money to go around, and the Chinese aren't going to end Bretton Woods II until they're good and ready.
The main course is still being prepared, and will be ready just in time to be served to the next Republican President.
The Republicans will then spend the next generation going over the "mistakes" of whoever that unfortunate person is. But like Hoover in 1929, and Carter in 1979, that person will be a victim of not just of his own party's outdated orthodoxy, but of the nation's unconscious acquiescence to that orthodoxy, nothing less and nothing more.
Said orthodoxy (for this era) being on vivid display right here, in this thread. It will only be overturned when it finally becomes obvious it simply won't work anymore.
As for the inevitable response "But I'm a Libertarian! Fie on both parties!"
You fool no one. Really. Get over yourself.
 
You must log in or register to reply here.
Back
Top