Comparing Dow Bubbles Past and Present: 1933, 2009, and Today

Comparing Dow Bubbles Past and Present: 1933, 2009, and Today

The Dow index for the period January 1933 to May of 1938 is plotted in green in the nearby figure. From the low of March of 1933 the Dow rose by 500% to a high in March 1937.  About a year later the bubble burst and the Dow plunged to 50% of its peak value. 

During the period March 2003 to March 2009 the Dow index followed a path quite similar to the 1933-1938 pattern, and is shown in green in the figure. The Dow rose by over 200% to a peak in October 2007, and then plunged by more than 50% in March of 2009, executing the trip in a period of 6 years, just like in the 1930’s.

Since the low of March 2000 the Dow has again risen 200%, and this history is shown on the figure in red. Will the Dow history of plunging repeat for a third time? If so, then look for the next plunge in late fall of 2013.

Velocity of Money: Why $3 Trillion Fed Dollars Are Not Moving the Economy

Velocity of Money: Why $3 Trillion Fed Dollars Are Not Moving the Economy

Velocity of money: If a single $100 bill that comes into town circulates from hand to hand and ends up paying off everyone's debts in the entire town, then the velocity of that $100 was very high. If the same $100 was stuffed under a mattress, its velocity would be zero. If money has no velocity, it is dead money.

There is plenty of money sloshing around in the coffers of financial institutions the world over, but either A) those who want to borrow it are not qualified to borrow it or 2) those who are qualified to borrow it have zero interest in borrowing it; they are desperately trying to pay down their existing debts, not acquire more debt.

Who has access to this liquidity? Not entrepreneurs, not small business, nor anybody who is in the business of growing the economy.

The Fed has created $3 Trillion of dollars via computer key-stroke (i. e., "printing" money), which has increased the money supply yet NOT caused inflation. Why? Because of the low velocity of money.

This will all change in about 10 years, when velocity of money, the economoy, and inflation, will all come roaring back. Then it will be tiger riding time for the Fed.

How Much Longer Will It Take to Recover the Great Recession Job Gap?

 How Much Longer Will It Take to Recover the Great Recession Job Gap?

At the November 2012 Rate of Job Creation (150K/Mo) It Will Take 14 Years to Restore Job Gap !!
 (i. e.,Jan. 2027)

November Jobs Report: The Long Slog Continues...