Actually, stock market shows economic decline for 13 years

Feb. 8, 2013

By John Seiler

The stock markets supposedly have been bumping up against the records they scored in 2007, before the crash during the Great Recession. Except it’s all phony.

The U.S. markets are denominated in dollars. But the dollar’s value has been plummeting since 2001, when then-Federal Reserve Board Chairman Alan Greenspan panicked after 9/11 and began a huge round of inflation. Later, current Chairman Ben Bernanke continued the printing binge, what’s now called “quantitative easing.”

The only real value of something is its cost in gold. Paper currencies — now really digital blips on the computer screens of central banks — are easily manipulated. They come and go. Anybody still use Confederate dollars or reichsmarks? How’s the Zimbabwean dollar doing lately?

Except for the Civil War, the United States was on the gold standard from 1789 to 1971, our period of greatest growth.

Since going off gold, we suffered “stagflation” — stagnation plus inflation — in the 1970s, and have been suffering it again over the past decade.

If we still were on the gold standard, here’s what the stock market’s performance really would look:

Dow and Gold

Notice how the market’s rise (in gold terms) began right after President Reagan took office in 1981 and instituted stable money and tax cuts.

Then notice when the crash began: right after the post-9/11 panic by Greenspan. President George W. Bush also has to be blamed for his wild spending; and for his dumb tax cuts, which as we recently learned, were “limited” and “expired,” bringing massive new tax increases in 2013.

Bush also went along with the inflationary policies of Greenspan and Bernanke; and President Obama has gone along with Bernanke’s policies.

Likewise, during the past 12 years, Republicans and Democrats have passed control of the houses of Congress between them. So both parties are to blame. Remember when “conservative” and “small-government” Republicans voted for Bush’s spending spree? And Democrats, of course, imposed Obamacare.

By contrast, Bill Clinton’s years in office began in 1993 with a tax increase and a slowdown of the market. But when the Gingrich Republicans took control of Congress in 1995, Slick Willie made deals with them to  start cutting taxes and spending, restoring the bloom of the boom — what’s called the dot-com boom of the late 1990s.

Next, look on the chart at the current price of the market, and note when it last was there: in 1990. Basically, there has been no growth the past 23 years. Sure, some computer and other high-tech companies have done extraordinarily well. But most of us have not.

This also is a major reason why the California state budget and many municipal budgets have been running red ink. The economy hasn’t grown at all, so revenues couldn’t keep up with inflation.

The country won’t recover until almost everything done by Congress and the presidents of the past dozen years is repealed.

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