A brilliant economist, Irving Fisher, is, unfortunately, best known for one of the worst stock predictions of all time.
On October 16, 1929 in a New York Times article Mr. Fisher was quoted, “Stock prices have reached what looks like a permanently high plateau…” after the Dow Jones Industrial Average increased six-fold over the preceding eight years during the Roaring Twenties.
Over the next month, the Dow lost almost half its value causing Mr. Fisher to go broke. The Dow ultimately went on to lose 89% of its value from its peak in late-1929 to its bottom in the summer of 1932. Continue reading “State of the Market: “A Permanently High Plateau”?”
The debt of the US government recently crossed $27 trillion. Additionally, there are talks for another $2 trillion of stimulus (which the stock market is loving by the way). So, if passed, that would put the US national debt at around $29 trillion!
We should note that the US National Debt was about $20 trillion at this time in 2016. So, the debt was doubled to $20 trillion from $10 trillion (2008-2016) during President Obama’s two terms and looks to be on pace to double again over the subsequent two terms based on the increase thus far in President Trump’s first term.
A $29 trillion debt represents almost $90,000 per US citizen. That means a household with four people has about $360,000 as their share of the national debt in addition to their own private debt and their state and local government debt. Consider that total US household debt is about $14 trillion so that’s another $42,000 per citizen, or $170,000 for that same household of four on average.
Let’s consider what this really means. Continue reading “$27 Trillion National Debt and Counting, How It Gets Paid and Who Pays It”
Last week the Federal Reserve announced it would cut interest rates by 0.25%. This is major news because it signals the end of the “tightening” cycle and is the first rate cut since the Great Recession fallout. I wrote about the stock market’s action during rate cutting cycles a few weeks back here.
Here’s another great chart showing market performance during the last two rate cutting cycles.
Continue reading “Painkillers Are Not Cures”
We recently found out that the U.S. government’s official estimate of the national budget deficit for fiscal year that ended September 30th was $779 billion. Yet, when I look at the change in the national debt for the same period I see an increase of $1.25 trillion.
So if the official deficit was $779 billion, how did the national debt grow by over $1.2 trillion? Sounds like questionable accounting practices to me. Continue reading “The True National Budget Deficit”
Often a new economic boom begins when things couldn’t get much worse. High unemployment, high inflation, low / negative growth, and stagnant / declining asset prices all contribute to a feeling of misery, which is usually the prevalent emotion at the bottom of a bear market or economic cycle.
Continue reading “Then vs. Now. The Beginning of A Long-Term Cycle vs. The End of One”