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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (1374)	8/28/1998 6:35:00 PM
From: Tommaso	Read Replies (1) \| Respond to of 3339

Another reason for the deflation in the years following the Civil War (not during the war, when there was huge inflation)was the steady conversion over decades of "greenbacks"--fiat money--into gold-back currency. Money got harder and harder, and finally the premium of the gold certificates disappeared. But it was not a period of uniterrupted prosperity. Indeed a pattern of booms and busts began that culminated in the worst deflationary bust of all in 1930-32. Because money is all fiat money now, with nothing solid backing it, a collapse in the stock market need not be the first stage in problems that followed 1929. There could be 8-10% unemployment (common in Europe right now) but 25% seems unlikely. There could be a recession that would pinch tax collections, especially for state governments that don't allow deficit spending. There could be vast numbers of bankrucies by peopleowing $35,000 on credit cards against an after-tax income of not much more than that. No one knows what will happen. But I do know that the stock market is still about twice as high as it rationally ought to be.