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Thread: rereading the 'holy scriptures' of the great depression ...

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    Default rereading the 'holy scriptures' of the great depression ...

    This is a 'must read' in order to understand what's really going on in today's global economy.

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    I had sworn off Elaine, but read it because both you and herself claimed it as a must read.

    Elaine has an opinion about global trade, she is mostly clueless about lot of things and it shows up in her writings. Again she only knows the partial picture. Like all half-knowledged 'experts' no tying loose knots coming out of innovation, demographics, productivity & technology,

    Her understanding of inflation and trade deficit is weak at best

    Her article pretty much can be sumed by this analogy. Look there were banks in 1931 and there was depression. There are banks now and there is going to be depression.

    When your neighbor kid agrees to mow your lawn for $1, you always take up the offer. When he is mowing your lawn for $1, you invent the Googles, the Oracles, the Facebooks, the iPods and the iPhones. If that kid suddenly grows up and charges $200, you bring your lawn mower and mow it yourself or find another kid. That is Global trade

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Quote Originally Posted by xanfiles1 View Post
    When your neighbor kid agrees to mow your lawn for $1, you always take up the offer. When he is mowing your lawn for $1, you invent the Googles, the Oracles, the Facebooks, the iPods and the iPhones. If that kid suddenly grows up and charges $200, you bring your lawn mower and mow it yourself or find another kid. That is Global trade
    Hopefully one plans on selling all those goodies for less than $1 or else you don't have a market place.

    Kinda like trying to sell $500K+ houses to 50K income earners.

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Official media outlooks on the Great Depression: 1927-1933
    http://www.gold-eagle.com/editorials...our062001.html
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    ^^^ we have even more 'talking heads' today !!!


    and an alternative take on the true cause of the 'great depression'



    (snip)"You probably saw the movie, The Wizard of Oz, more than once. It was based on a book written by a fellow named L. Frank Baum. Professors who study such matters have claimed that Mr. Baum intended the book to be a parable. It told a story about politics in America around the beginning of the twentieth century [1].

    Every character and event in the book was supposed to represent a character or event in the political drama being played out at the time. Everything the working people placed their hopes in had failed them. The Wizard of Oz was a parable about those failures. Presidents, congressmen, governors, and state legislators had all failed to fix the economic problems as they had promised [1].

    According to the professors, the book expressed a deep cynicism about our political system. Workers and farmers saw the fruits of their labor going mainly to corporations. Workers and farmers cast a lot more votes than did corporations. So they tried to use the ballot box to get a better deal in the economic game. It didn't work.

    It didn't work because, in economic matters, "We the People" had little or no influence over government policy. We elected presidents, governors, congressmen, and state legislators. But they didn't control economic policy either. Federal judges did. Beginning in the 1880's, the Supreme Court used the substantive due process scam to steal control of the national economy [2].

    Elected politicians couldn't fix economic problems because courts struck down every attempt that might succeed. Based on a review of its decisions, one can mount a cogent argument that the U. S. Supreme Court caused most of our economic grief in the era from 1890 to 1937. The grief we're talking about includes the Great Depression [3].

    Of course there was no single cause for the Depression. Economists and historians have offered various lists of partial causes. They include things like the 1929 stock market crash, the 1930 Smoot-Hawley tariff law, economic problems abroad, and an overly timid Federal Reserve. You can review the lists in detail in hundreds of books. See, for example, the works by Batra, Galbraith, Garraty, and Schlesinger listed in the Bibliography at the end of this article. Unfortunately, you will not find a coherent explanation for the causes of the Great Depression in those hundreds of books. The only coherent explanation is unacceptable in academic circles.

    To be sure, economists and historians have got part of the story right. They identified various partial causes that helped trigger the depression, prolonged it, or made it more severe. But there was only one main cause. Fraudulent rulings by the U. S. Supreme Court over several decades created and maintained economic conditions which had to end in disaster. Historians, legal scholars, and economists lay the groundwork for placing most of the blame on the Supreme Court. But they avoid drawing the obvious conclusion [3].

    Social scientists wouldn't think of blaming the Supreme Court for the consequences of its rulings. They cling to the demonstrably false premise that all the Court does is faithfully interpret the laws and the Constitution. If that premise were correct, blaming the Court would be the same as blaming the laws and the the Constitution. However, if the justices are making discretionary policy, they deserve blame for the damage their policies cause. Supreme Court justices are certainly making discretionary policy. It trashes the Constitution; but they do it anyway.

    Every once in a while our judicial employees invent a brand new mandate they claim to find in the Constitution. They then hand down orders to exploit their bogus new mandate in support of whatever agenda they're working at the time. Sometimes those orders lead to a big crime wave, a civil war, a depression, or some other catastrophe.

    Social scientists then perform a series of detailed studies to document reasons for the catastrophe. However, on any issue that might threaten judicial independence, they stick their heads in the sand. They identify all the minor causes for the catastrophe and pretend that's the whole story.

    They don't really want to know the whole story. The Supreme Court is not a trustworthy and unbiased channel for instructions from our founders. It's a gang of stealth legislators creating new public policies out of whole cloth, policies which often lead to tragic results. Academics, lawyers, and journalists don't want any part of that idea. Widespread public awareness of that idea might lead "We the People" to do something rash."(snip)

    (snip)"You will now learn how an activist Supreme Court created and maintained the "fundamental" unsoundness. I'll first summarize my argument, then I'll fill in, and document, some specifics. Finally, I'll connect the specifics to Galbraith's five weaknesses.


    SUMMARY OF ARGUMENT

    The Supreme Court seized control of the nation's economy in the 1880's and held it through the mid 1930's. For several decades the Court acted as a national economic policy czar. Its policies caused a small percent of the households to end up with an unsupportable share of national income and most of the wealth. Let's call those related problems the 'income gap' and the 'wealth gap.' The growing income gap (Galbraith's maldistribution of income) finally devastated the purchasing power of the working class. The wealth gap funded extreme speculative excess on the part of the investing class. These two developments finally destroyed the economy after the Court tightened its stranglehold on national economic policy during the 1920's. The justices maintained that stranglehold, prolonging the Depression, until 1937 when President Franklin D. Roosevelt alarmed them with a credible threat to their power [5].


    THEIR PERSONAL "ECONOMIC PREDILECTIONS"

    In a March 9, 1937 radio "fireside chat," President Franklin D. Roosevelt observed that a majority of Supreme Court justices had been reading into the Constitution their own "personal economic predilections." Among historians and legal scholars, it's well accepted that activist judges tortured the Constitution in order to take control of the American economy during the 1880's and maintain that control for four or five decades [5].

    By the mid 1880's fraudulent Supreme Court rulings had completely destroyed Congress's efforts to use the Fourteenth Amendment for its intended purposes, to define and safeguard the rights of former African American slaves. And the justices were looking for something else to use it for, something a little more to their liking. In 1886, in Santa Clara County v. The Southern Pacific Railroad Company, they announced that the real purpose of the Fourteenth Amendment was to empower the Court to supervise all the states' corporate tax and regulatory policies.

    You think I'm kidding, Right?

    Chief Justice Waite opened arguments in the case with the following statement:

    "The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does."

    The Court did not "wish to hear argument on the question" because there wasn't any evidence to support what it wanted to do [6].

    Then, in 1890, the Court seized control over the power to set railroad freight rates. Some states had tried to set them a little too low for the judicial taste. The Court cut the heart out of the Sherman Anti-Trust Act in 1895. It also claimed, in 1895, that the Constitution forbade a 2 percent federal income tax on the wealthy. The people had to adopt the Sixteenth Amendment to fix that doubtful ruling [7].

    A legal scholar named B. F. Wright compiled a list of federal Court rulings, between 1899 and 1937, which blocked attempts by states to regulate corporations. Mr. Wright had 184 decisions on the list [8].

    For example, the Court said that neither states nor the federal government could place limits on the number of hours employees could be forced to work; it claimed that the Constitution forbade any kind of minimum wage law. It also forbade any laws against child labor. During the 1920's, the Supreme Court redoubled its efforts to block economic policies demanded by "We the People." The number of its rulings, in that decade, which struck down government laws regulating the behavior of corporations exceeded the total number during the prior fifty years. The 1920's ended in the Great Depression [9].

    The economic effects of Supreme Court rulings were direct and obvious. Between 1923 and 1929, output-per-labor-hour increased by 32 percent. Yet wages increased by only 8 percent. The average work week remained at 50 hours or higher. Sixty, seventy, or even eighty hour work weeks were not uncomman. The Chief Justice, explaining the Court's policies toward labor, reportedly said, "That faction we have to hit every little while" [10].

    At the risk of being tedious, let me remind you what parts of the Constitution the Court used to justify its economic war against "We the People." It was the "due process" clauses of the Fifth and Fourteenth Amendments. It used the Taney Court's substantive due process scam to write its members' own "personal economic predilictions" into the Constitution [5]."(snip)

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    I've been reading a paper about stock market crashes
    http://papers.ssrn.com/sol3/papers.c...ract_id=656764

    It uses the 1987 crash as the main example. The basic hypothesis is that 1987 was caused by information staying hidden from the market, so the mean reverting that would have otherwise happened over time ended up happening all at once when people caught on. It notes that for the Great Depression and Dot Com Boom crashes, many new companies in the market had no dividend histories and so were hard to value.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Quote Originally Posted by person View Post
    Official media outlooks on the Great Depression: 1927-1933
    http://www.gold-eagle.com/editorials...our062001.html
    Great!!! Now can you post a link where many 'expert's claimed we would go into a depression in 1987 and were proved wrong?

    No, that would be fair, balanced and correct research which will improve our critical thinking. Who wants that?

    How about some research of average net worth of people who read shady web-sites vs WSJ/FT? (I know Bill & Warren are WSJ fans. So, that'll make it a fair game, because all these other wealth generators logon to gold-eagle.com)

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    actually, I prefer to judge WSJ/FT statistics ...



    (snip)"NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years

    By Jennifer Saba

    Published: March 28, 2008 12:55 PM ET

    NEW YORK The newspaper industry has experienced the worst drop in advertising revenue in more than 50 years.

    According to new data released by the Newspaper Association of America, total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006 -- the most severe percent decline since the association started measuring advertising expenditures in 1950.

    The drop-off points to an economic slowdown on top of the secular challenges faced by the industry. The second worst decline in advertising revenue occurred in 2001 when it fell 9.0%.

    Total advertising revenue in 2007 -- including online revenue -- decreased 7.9% to $45.3 billion compared to the prior year. "(snip)

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Quote Originally Posted by xanfiles1 View Post
    Great!!! Now can you post a link where many 'expert's claimed we would go into a depression in 1987 and were proved wrong?

    No, that would be fair, balanced and correct research which will improve our critical thinking. Who wants that?

    How about some research of average net worth of people who read shady web-sites vs WSJ/FT? (I know Bill & Warren are WSJ fans. So, that'll make it a fair game, because all these other wealth generators logon to gold-eagle.com)
    You are what I call a "data conservative."

    People looking into the future sometimes need to see the more imaginative out there. The wild haired futurist.

    Let's set our play in the housing bubble. A couple years ago one could hear all the "data" pointing to incredible returns. Returns that have been going on for half a decade or more. The more wild haired people would point out "hey, there is a danger here" and the data conservatives would pull out their charts and graphs and go on about how the ROI on RE has been holding it together for years and stumble through rambling rationalizations of real gains because of these sanguine fundamentals.

    What you don't understand, and I speak mostly for those who consider your words more so than yourself, is that investing is basically looking into the future. And looking into the future requires a little bit of prophecy, divination, and a couple tarot cards.

    So I am game for some of Melonie's Jules Verne types predicting submarines in an era of wooden mast ships - they may be a bit kooky but they may have a spark of reality to be or inspiration of what is to become.

    But the reader, especially one laying down the cash, should read ALL of our postings from me, Melonie, Katrine, and even you Xanfiles with a critical and questioning mind.

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Quote Originally Posted by xanfiles1 View Post
    Great!!! Now can you post a link where many 'expert's claimed we would go into a depression in 1987 and were proved wrong?

    No, that would be fair, balanced and correct research which will improve our critical thinking. Who wants that?
    Where I come from, we try to figure out what is true by gathering lots of data from different places, reading what attempts other people have made at figuring it out, thinking hard and discussing things with others.

    If you have a link to the one true source of Truth, please post it
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    Quote Originally Posted by Deogol View Post
    You are what I call a "data conservative."

    People looking into the future sometimes need to see the more imaginative out there. The wild haired futurist.

    Let's set our play in the housing bubble. A couple years ago one could hear all the "data" pointing to incredible returns. Returns that have been going on for half a decade or more.
    Actually, the opposite is true. I'm not a data conservative.

    In fact, Past returns (less than 10 years) are the worst indicators of future performance.

    However, the following are universal truths
    i) Value of an asset = Present Value of all future cash flows
    ii) Short term there are descrepencies between Price and Value
    iii) Long term Price converge to Value

    Short Term, Price of an asset follows Supply & Demand
    Long Term, Price of an asset follows value of an asset.

    Eg: If S&P 500 P/E is 20, its earnings yield = 5%
    Currently Bonds yield 3.5%
    Rent is the yield of a Real Estate and currently it is around 1.5%
    Gold's earning's yield is 0%
    Tulip Bulb's earnings yield was 0%
    Internet Stocks earnings yield was 0%

    If an asset's earnings potential is 0%, its price is purely driven by supply and demand.

    If an asset provides earnings yield greater than a Bond, it is generally cheaper. (Thats why Real Estate is not cheap, but definitely cheaper than Gold) Of course there is risk to S&P 500 earnings. But if you have 500 friggin different companies in the mix, you are very well diversified.

    S&P 500 Earnings can tank 30% and it is still cheaper than Bonds. Thats how much margin of safety you have. S&P 500 earnings grow with GDP

    When will S&P 500 trade to its value? Who knows? 2009, 2020?

    Those analysis are driven by data, but data that matters. It is not driven by past 'returns'

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    Default Re: rereading the 'holy scriptures' of the great depression ...

    ^^^ all technically true, but only from a US dollar centric viewpoint. If viewed from a 'global purchasing power' standpoint, a 5% rate of return in US dollars on the S&P, for example, can equal a negative 5% change in 'global purchasing power'. Similarly a 0% rate of return in US dollars on gold bars can equal a positive 15% change in 'global purchasing power'. Similarly a 3% rate of return on US gov't bonds can equal a negative 5% rate of return for a foreign investor living in a Euro centric economy.

    For better or worse, the US dollar is not the dominant world currency that it once was. Thus all of the US dollar centric theories must be brought into question in a global economy that is increasingly dominated by foreign investors and foreign currencies.

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