Wednesday, March 5, 2014

Parallels between the 1929 stock crash and now

By Glen Tate (299days.com)
We all know the stock market will crash. The record high stock prices today are all artificial: the fake corporate earnings, the Fed pumping $1 trillion a year into the economy (mostly into the stock market, at least indirectly), the fundamental weakness of the economy, and the fact that a significant portion of the money in the stock market is just from people blindly throwing their money into 401(k)s instead of people investing in companies that will actually make an honest profit.  That is, the current high numbers in the stock market are not because the companies are worth it; it’s due to the above-mentioned phony bologna.
There are some big differences between 1929 and now, and they relate to how much more devastating a crash would be now. In 1929, we had a fundamentally strong economy.  It was largely unregulated. There was no Obamacare, no ridiculous taxes, no EPA, etc. In 1929 the Federal Reserve was not pumping any money into the stock market; now it’s a trillion dollars a year.  Another huge difference is that in 1929, very few people were actually in the stock market.  Investors in 1929 were almost exclusively the rich.  Now most of the country has a 401(k).  The destruction of a crash would hit most Americans now, not just a handful of rich people.  In 1929, America was far, far different socially. There was no welfare and people were about a 1,000 times more self-sufficient than now.  Most people in 1929 lived on farms and could grow their own food and there was no entitlement mentality.  Now there is violence when EBT cards don’t work for a few hours in a few areas.
I am not a stock trader trying to predict when the market will crash.  I focus on the consequences of a crash. What all this means, at least to me, is that the current stock market is much more fake, and the consequences for a crash are much more dire. In 1929, it would have been absurd to think there would be massive riots after a crash.  Now, it is widely accepted.  In fact, the federal government is actively planning for these riots.  Think about that: the government is not only acknowledging rioting after a crash, but is planning on how to deal with it.
I think the graph is important to think about.  If nothing else, it should kick people into gear when it comes to getting ready for the crash that is coming.

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Blogger note:
Here's a little VERY valuable hint:   Get out of all of the markets, including your IRAs and 401Ks, get out of your CDs and other bank investments, then take all that cash and buy physical GOLD and SILVER and do it NOW!  Take the penalties. Keep in mind that when the stock or bond market crashes, it WILL take the whole banking system with it.

(Or you can just ignore me and lose everything you have accumulated in your lifetime in as little as one single day)

Still not convinced?  If your investments are not currently getting a 16% or better return, you are already losing money in your savings or investments every day.  According to the CPI formula of the 1980s, true inflation today is about 15.5%. The gov't has been changing the formula over and over again, pulling out things like food and fuel prices, or anything else volatile enough to increase the inflation number. The FED reports inflation as 2% so they won't have to increase social security benefits or pay higher yields on treasury notes. Don't believe it? Then why does the 20oz can of green beans at the grocery store now weigh 11oz and costs 150% more? Why are most items on the dollar menu no longer a dollar? WAKE UP AMERICA!