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Shouldn’t The Stock Market Be Down A Lot More Than It Is? It should – and it is.

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March 26, 2008 – Comments (13)

Great post from itulips.com 

"Here's a chart of the global stock market since the turn of the year 2000 as priced in hard money, updated through the current Ides of March. It reveals that the five year "bull market" we just experienced was a fraud based on the money illusion. That is, the appearance of rising stock values was due solely to the currency we priced them in losing value while stocks reached a temporary, versus a permanently high, plateau.

Since then, the stock market is down about 20% – in dollars. The same fraud is still at work on the way down, as well.

We have two things going down. Stocks and the currency we price them in – dollars. Since the start of the year the dollar, while declining, has – believe it or not – fallen falling less rapidly than stocks.

Add it all up and if you thought the 2002 plunge was steep just take a look at the right side of this chart. "

Chart is here: 



 

13 Comments – Post Your Own

#1) On March 26, 2008 at 8:09 PM, Hezakiah (87.52) wrote:

So I am assuming that the units of the left axis are fractional gain (or loss).  How can there be a loss of greater than 100%...which is shown on the full chart?

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#2) On March 26, 2008 at 8:29 PM, abitare (49.76) wrote:

Hezakiah,

Gold has risen from 300 an once to 1000 an once (3X or 300% rise). The US market has risen 70% in nominal ie dollar terms since 2001.  So the US market priced in down in nominal terms (2000 points)  plus the drop in the US dollar.  

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#3) On March 26, 2008 at 8:47 PM, EScroogeJr (< 20) wrote:

There is only one flaw in that logic: people can't eat gold.

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#4) On March 26, 2008 at 9:07 PM, Contrarian7 (< 20) wrote:

yes what you say is true but remember it doesnt hurt to buy when the herd is buying you can make a lot of money on it, just don't be at the cliff. Perception is reality.

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#5) On March 26, 2008 at 9:09 PM, abitare (49.76) wrote:

But you can trade gold an once of gold for plenty of food.

How many paper dollars do you now have to trade to get food and gas?

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#6) On March 26, 2008 at 9:19 PM, Contrarian7 (< 20) wrote:

all fiat currencies are destined to fall...and a gold of ounce is still pretty cheap compared to where it should be...and yes you can BUY a lot of food with it. Hopefully our government has a plan to stop inflation because savers are getting slaughtered...and that's not fair for responsible Paul.

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#7) On March 26, 2008 at 9:26 PM, abitare (49.76) wrote:

Contrarian7,

We are aligned.  

 

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#8) On March 26, 2008 at 9:40 PM, redearth329 (99.82) wrote:

Oh, come on, Contrarian! All fiat currencies are dstined to fall? William Jennings Bryan would be so proud. We're not on a metal standard anymore: any one coin is as good as any other. The exchanges have to do with price indices in the underlying cultural markets.

Ps.: Savers should get slaughtered. Or at least left in the dust.

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#9) On March 26, 2008 at 9:50 PM, abitare (49.76) wrote:

redearth329,

Thanks for the reply. That is one of the dumbest response anyone has posted on my blog. Are you drinking?

 any one coin is as good as any other.

You cannot be serious? Gold Maple Leaf vs Mexican Peso?

Savers should get slaughtered. Or at least left in the dust.

Punish those, who are doing the right thing saving their money?

Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap.

Galatians 6:7

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#10) On March 27, 2008 at 1:23 AM, DemonDoug (32.31) wrote:

Escrooge: People can't eat houses, tech stocks, or oil either.

Actually, gold is edible in very small quantities.  Ever had goldschlager?  Gold is a trace mineral that there is some evidence that there are healing properties.

So a double whammy on you, buddy. 

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#11) On March 27, 2008 at 4:25 AM, abitare (49.76) wrote:

DD,

Lol,

Ever had goldschlager?

Yep, New Years eve, tough to keep down. Keeps you warm 

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#12) On March 27, 2008 at 4:56 PM, sethatk (53.56) wrote:

You make a good point. Last year when I was in Spain. I did not bother to exchange my euros when I got home. Saving them for a rainy day. Its looks like rain.

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#13) On March 27, 2008 at 6:11 PM, Tastylunch (29.40) wrote:

really really great post abitare

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