Sunday, January 24, 2010

2000-2010: The Worst Financial Decade Since....

a) The 1970's.
b) The Great Depression.
c) The 1830's.
d) The dawn of recorded human history.

Correct Answer: D

Even the historic price crash from the Bank of England's South Sea Bubble was complete by 1725 and prices rose slightly from 1720-1730.

The beginning of SBUS retribution against Americans in 1836 (a direct fractal equivalent to today's Federal Reserve fiasco) took markets down, but only to even between 1830 and 1840 because the central bank's inflationary surge into 1836 was irrationally steep. The net change from 1830-40 was approximately 0%. Prices continued to plunge deeply into 1842 as Biddle's BoE-spinoff tried to rape America after Andrew Jackson kicked him back to England. But without central bank looting, the US economy quickly surged on true fundamentals, and was iron horse strong by 1850 as the Industrial Revolution took root.

The 1930-40 Dow dropped a whopping 40%, but the Fed only stole 58% of the dollar's buying power as measured by the rise in the gold price. Net charge to Americans: a WWII-inducing 65% loss.

2000-2010 took a 15% price plunk on top of a momma-better-start-working -77% dollar pancake, also measured by gold priced in dollars. Net charge to Americans: a brutal 81% loss.

And that's after kicking out 10 of 30 Dow components between 2000 and 2010 for poor performance.

Our previous decade's steep spike in gold price indicates that the great majority of America's 2000-10 loss was exported to the private, multi-national Federal Reserve bank. Physical wealth exported. Worthless paper imported. In other words, let me steal 90% of your stuff and I will append a zero to your currency prices so your "net worth" doesn't change.

What will 2010-2020-2030 bring? Too bad we can't ask Andrew Jackson. Bernanke Biddle already has the king's bank in hot water.


  1. FDR

    Last week you wrote about how price discovery would come from a forced sale of Commercial RE from Goldman Sachs will come to a head.

    Barney Franks is on this, see's this coming and is trying to pass a law that it will take FIVE years to unfold. He said we don't want fire sale prices.

  2. Hi Dancing Bear,

    Why not pass a law banning cancer?

  3. FDR, what I don't get is the end game. I am confused because I am way better off than in 2000. I have just worked and raised Children and watch everything I own go way up in value. My pay has more than doubled since 2000, my house has not much left to owe on it and even a firesale would still pay me double. All my investment accounts are up over 300% in the last 10 years, granted GS has managed them. I hear these things and think, HA! When do we actually see the pain from all of this you speak of. A lot of people are feeling it I am sure, a lot of people got bubble jobs and those are now gone, but they would not have had jobs in the first place. A lot of people bought a house at the top with no money down and are now out of the house, they would not have had a house in the first place. They have nothing to lose by walking away as they did not lose any money. I presume you believe that the pain has not yet started but is coming. That I can believe because someone has to lose in all this and no one has yet. I have opened a C of I account and would like to protect my small fortune. I am in my mid thirties and college educated with children under 10. I have done well don't need to make any more capital gains if deflation shows up in force. The money i have will last my life if i don't live like an idiot. Of course, I could always lose my job and things could change, but as far as work goes we have picked up so much business over sees that the loss in the US consumer has been positive on net. We are actually looking to hire quite aggressively in 2010. Any ways, i would like to ride this thing out and C of I seems logical and all I can do. GS has liquidated my securities in the first week of the new year and I have been slowly moving the cash. I guess i was asking when, in the real world, we begin to see signs of pain or real deflation outside of housing. I mean real deflation, not a 20% off sale at Men's Warehouse, which they have always had by the way! LOL Good luck with your short campaign anyway, i hope you have done as well as I since 2000 on the other side of the trade. Entry position, long vs. short, actually makes very little difference in a trade, as that is the entry. Profits are always made on one's point of exit. There in lies the secret to trading the market, ever since a trader friend explained this to me i have done much better. I was always worried about guessing the future direction of prices to try to get on the right side, when I finally understood that does not matter.

  4. I assume you mean the US, FDR. My family's losses when the USSR collapsed was 100% in one single night: savings, pensions, etc. I just don't understand why it is assumed that can't happen here.

    For that reason I just can't part with my metals. I know you're shaking your head, thinking 'what a fool'. You are probably right.

    Damn FDR, I envy your keen mind.

  5. "FDR, what I don't get is the end game. I am confused because I am way better off than in 2000." Anonymous.

    I am glad that you are way better off. I think Obama, Geithner, Bernanke, Paulson(specially him) are doing way better as well. I am not saying that you are associated with them. All I am saying is that if 5% of the population do better it doesn't mean that "we" will do better. You see when people are hungry, jobless and/or indebted crime goes up. The end game is not good for any for us. You might see also see that you do well but what about your brother, your cousins, friends etc.


  6. You mention banks' insolvency; do you have any thoughts on brokerage accounts (scottrade) as far as just leaving money sitting like a savings account?


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