Hi John,
yes, I agree that 2008-9 was the 1929 event. However, that doesn't preclude us from seeing another 20-40% correction at the next cyclical downturn. Think on it. From 2001-2, we also saw market losses of around 40%. Then we saw it again 2008-9. I think that is going to be the norm from here on out. We'll get tepid growth for 4-5 years, then we'll get strong market corrections. This is what it is like when we live in a high debt, low growth world, with banking insolvencies a constant risk. The frequency of recessions should be higher as well.
That's the trouble with an overly meddlesome Fed. They attempt to smooth, but they just create more volatility instead. We should return to a stable, strong dollar policy and scrap the employment mandate for the Fed. And we should move back to a balanced budget ammendment, with a rider that says if Congress doesn't pass a budget in any given year, then they automatically must stand for re-election the following year. That's why I am beginning to like Parliaments better. if they can't get work done, then the people fire them and they have to reconstitute a Parliament that can actually get something done. Our two party system has become stagnant and incompetent. |
