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News from the 1930s

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September 03, 2009 – Comments (14)

I came across an interesting website today called News from 1930.  I wish that there was actual scans of the papers so that we can see if these quotes were really in there, but if tey are real they sure are interesting. 

Check out these interesting quotes from the Wall Street Journal - August 28, 1930:

There's a large amount of money on sidelines waiting for investment opportunities; this should be felt in market when “cheerful sentiment is more firmly intrenched.” Economists point out that banks and insurance companies “never before had so much money lying idle.”

And

Fed. Reserve seen continuing easy credit policy pursued since start of year. Some concern that increased reserve credit “will flow into speculative channels,” but this doesn't seem to have happened much yet.

Sound familiar?  I'm not saying that we're headed for a depression like we saw back then.  I don't believe that we are, just that the people who think that all of the money that is currently supposedly sitting on the sidelines will force the market much higher without the earnings and revenue growth to back it up are likely going to end up being sadly mistaken.

Similarly, unless foreign governments are completely repulsed by the rapidly growing U.S. national debt and in turn the value of the dollar drops significantly, I'm not buying the whole the Fed's current policy is too loose and it is going to create hyper-inflation theory either.

Deej

14 Comments – Post Your Own

#1) On September 03, 2009 at 8:44 PM, unswift (83.79) wrote:

I wonder what the vibrating apparatus is that CN had to offer ....I guess that's why they have been around so long.......those naughty Canadians

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#2) On September 03, 2009 at 8:44 PM, unswift (83.79) wrote:

I wonder what the vibrating apparatus is that CN had to offer ....I guess that's why they have been around so long.......those naughty Canadians

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#3) On September 03, 2009 at 8:48 PM, unswift (83.79) wrote:

Sorry about that

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#4) On September 03, 2009 at 8:54 PM, russiangambit (29.36) wrote:

Somehow I am not surprised that it is the easy money approach that was  tried to solve the crisis in 1930s as well. It is the path of least resistance, the coward's way out. The only problem it is the wrong way.

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#5) On September 03, 2009 at 9:36 PM, XMFSinchiruna (26.97) wrote:

Similarly, unless foreign governments are completely repulsed by the rapidly growing U.S. national debt and in turn the value of the dollar drops significantly

He Deej ... with all due respect, what do you think is happening before your very eyes? :)

Consider the implications of the entirety of China's actions to date. Consider the election victory by the Democratic Party of Japan and its agenda for demanding Yen-denominated bonds from the Treasury. Consider the technical and fundamental picture for the USD. Consider that the majority of the $600 trillion (or so) derivatives market is comprised of contracts denominated in, you guessed it, USD. Consider the opposing directions of federal spending and domestic revenue (declining tax base). Consider the fiscal conditions of our states, cities, and towns. Consider the implications of the commercial real estate crisis and the number of banks for which that will be the last straw. Consider the insolvency of the FDIC and the necessity therefore for a major bailout. Consider that the REAL unemployment rate is actually 16% and rising. Consider that real inflation bears no semblance to the official figures.

Consider that this just might be the greater of two depressions. It's not a pleasant thought, but it just might be right.

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#6) On September 03, 2009 at 11:00 PM, nuf2bdangrus (< 20) wrote:

The sidelines argument is the stupidest piece of myth ever perpetuated.  think of it.  If there is a thousand dollars on the sidelines, and I buy a stock...what happens?  There is a SELLER, and thus there is still a thousand dollars on the sidelines.  There is no net gain/loss from that transaction. 

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#7) On September 03, 2009 at 11:25 PM, JibJabs (86.61) wrote:

nuf2bdangrus: uhhhh, prices move up and down. Reflecting the quantity of $ in and out of the market . . . 

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#8) On September 04, 2009 at 3:27 AM, kaskoosek (37.14) wrote:

I completely agree with Sinch. All signs are pointing to that.

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#9) On September 04, 2009 at 6:23 AM, TMFDeej (99.25) wrote:

Sinch, I never said that the U.S. dollar wasn't going to lose value.  While I'm not nearly as adamant about it as your are, I definitely believe that is a possibility.  However, while we have seen some dollar weakness lately, to date it hasn't exactly imploded:

My point was that the current economic environment and the withdrawal of liquidity from the system by still somewhat tight credit conditions, slow economy, and the complete implosion of the shadow banking system will likely be more than enough to offset the inflationary effects of the money that the government is trying to flood the system with.

Deej

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#10) On September 04, 2009 at 10:30 AM, XMFSinchiruna (26.97) wrote:

the complete implosion of the shadow banking system

If only that had taken place already! It's the shadow banking system, precisely, that received the bailouts.

We're in for a world of hurt when the deleveraging takes hold anew, but that will not derail the inflationary pressures of a currency crisis. We will have stagflation, and plenty of it.

 

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#11) On September 04, 2009 at 10:52 AM, kaskoosek (37.14) wrote:

Today what we are in is due to a debt bubble.

in 1929

It was a stock market bubble.

 

Huge difference 

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#12) On September 04, 2009 at 1:12 PM, TMFDeej (99.25) wrote:

Sinch, what I was specifically referring to is the complete inability of companies to securitize loans today.  In the past, a ton of liquidity was created by companies securitizing credit card loans, auto loans, mortgages, etc... the market for those products has completely dried up in many cases.

Deej

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#13) On September 04, 2009 at 1:58 PM, jesusfreakinco (28.96) wrote:

Sinch / Kas,

I agree with you guys.

It'll be interesting to see how many banks get shut down this weekend in the long holiday weekend.  The calls for 500 - 1000 more banks to fail in the next year are growing.  At some point, people will start to panic and a bank holiday will be around the corner.

I am amazed at how well the Fed and Administration is managing the MSM's reporting of the crisis.  Brilliant to have friends in high places, eh?  No wonder CNBS viewership has dropped so much.

JFC

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#14) On September 04, 2009 at 2:01 PM, booyahh (< 20) wrote:

On September 04, 2009 at 10:52 AM, kaskoosek (99.79) wrote:  

   Today what we are in is due to a debt bubble.

   in 1929

   It was a stock market bubble.

   Huge difference 

Ummm...the 1929 stock market bubble was caused by easy money and excessive borrowing i.e. the 1920's debt bubble caused the 1929 stock market bubble...kinda like what we are in today.

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