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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	3/7/2002 12:24:06 PM
From: tradermike_1999	Read Replies (4) of 74559

Did you know that living standards for Americans doubled during the 1940's? Imagine if every family in America made double now what they did ten years ago(the 1940's figures include wages, benefits, new job opportunities, new consumer goods, new technology, and government programs such as the GI BILL). The baby boom followed. Television. Changes in how people lived. Did you know that the United States went through two major technological revolutions that truly created a "new economies." The first came with the laying down of railroad tracks and telegraph wires in the 19th century which created a real continental economy and brought about the appearance of large scale corporations and the first national consumer brands to take advantage of it. The backbone of this real revolution was the industrial revolution and the tidal wives of immigrants that came into this country in order to fill all of the new jobs that were available. Your family might have come into this country on one of those waves. Mine did. And then the 1920's. Did you know that the output per working in manufacturing increased by 43% between 1920 and 1930? The moving assembly line and radio helped to drive this revolution. And it filled over once again into people's lives. The automobile changed the way people lived. The way they dated and fell in love. I bring this up for one reason. Today Alan Greenspan was on TV again and claimed that we are now in a "new economy" thanks to the computer. He claimed that the computer lessoned the blow of this recession and is going to pave the way for a big boom because it helps businessmen track inventor and makes workers more productive. He embraced this same theory in the 1990's to claim that inflation was no more. Since then Fed researchers have dimissed that view, but Greenspan today seemed to still cling to the "new economy" theory. Contrast the technological changes today with those of the 1880's, 1920's, or the 1940's and you'll see that this notion is one of the biggest jokes foisted on the American public. It is used to justify insane stock valuations and the reckless Federal Reserve policies that Greenspan has carried out over the past decade. The industrial revolution makes the computer look like a toaster. We weren't in a "new economy" that suspended the rules of economics and we aren't in one now. Debt still matters. Capital investment still matters. You can't create an economic boom with record levels of consumer and corporate debt and a hyperinflation of the money supply - computers or not computers. Internet or no internet..... Put the 1990's "productivity miracle" in perspective with the history of the American economy and it is just a small blip. But at the moment this blip is getting people all worked up about stocks again. They seem to once again be caught up in the "new economy", chasing stocks such as Cisco, Corning, and JDSU. How long can they do it? We won't know until the music stops and when it does there won't be enough chairs for severy one to sit down on. Some people are going to get bruised and hurt. For now though, enjoy the music.

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