Chart shows how weak recovery is

Chart shows how weak recovery is

The DOW stock index supposedly shows we’re enjoying a strong recovery. It recently set records, although it’s off a bit today.

Not really. Thanks to Chart of the Day, here’s the history of the DOW adjusted for inflation:

Dow history, July 31, 2013, Chart of the Day













Notice a couple of things:

* The incredible 1929 stock crash is evident.

* There was a weak recovery in the mid-1930s during the New Deal, sort of like today under the Obama Deal.

* Strong, lasting recovery didn’t begin until 1946, just after World War II. As economists Vedder and Gallaway explain, President Truman wanted to keep most of the New Deal measures and wartime controls. But Congress bucked him, cut the controls and also cut taxes, sparking the boom that lasted until the late 1960s.

* In the late 1960s, the massive expense of LBJ’s Great Society and Vietnam War began buckling the economy; he imposed a 10 percent surtax in 1968.

* In 1971, with his “Nixon Shock,” President Nixon jolted the economy with wage and price controls, tax increases, tariffs and going off the gold standard. That artificially boosted the economy past his 1972 re-election. Then the bottom fell out of the economy. We suffered “stagflation” (stagnation + inflation) and the “malaise economy.” The stock market kept declining.

* In 1983, President Reagan’s tax increases finally kicked in with full force, beginning nearly a 20-year run of prosperity, with only one minor recession. He also cut regulations. Budgets were not cut enough, hence the deficits of those days. And a quasi-gold standard was restored by Fed Chairman Paul Volcker, with gold pegged at about $350 an ounce, stabilizing prices and quieting inflation.

* Bill Clinton’s second term included tax cuts that canceled the tax increases of his first term; welfare reform; and the first budgets in three decades.

* The dot-com bust of 1999-2000 was a minor problem.

* In 2001, terrorists flew planes into the World Trade Center and the Pentagon. President Bush and Fed Chairman Alan Greenspan panicked. Bush went on a wild spending binge, reversing the Clinton spending restraint and bringing back the mega-deficits. Not just defense was increased; two-thirds of new spending was domestic. His tax cuts were defective because they had an expiration date. Greenspan inflated the currency, with gold rising sharply above the $350 average of the previous 20 years. And Greenspan kept interest rates artificially low, blowing up the housing bubble of the mid-decade.

* In 2007-08, the economy collapsed, which is shown in the cart.

* From 2008 to now, supposedly the policies of Fed Chairman Bernanke and President Obama have “saved” us. But as the chart shows, the DOW, adjusted for inflation, only is back to where it was 15 years ago. American now is suffering a second “lost decade.” Even the Fed today reported, according to AP, “that the U.S. economy is growing only modestly, a downgrade from its June assessment. The Fed expects growth will pick up in the second half of the year, but the more cautious message may be a signal that it’s not ready to slow its bond purchases soon.”

I short, it’s cuts in taxes and regulations, plus stable money, that produce growth; and increases in taxes and regulations, plus unstable money, that impose stagnation or recession.


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  1. Let It Collapse
    Let It Collapse 31 July, 2013, 13:18

    I am predicting a huge crash. Don’t know exactly when. But this economy is like a tinderbox soaked in gasoline. GDP grown for 1Q was 1.8%, later revised down to 1.1%. 2Q GDP was 1.7%. 5 years outside the 2008 meltdown we should be hitting on 3.3% GDP growth since everything is supposed to work in cycles. But the economy continues to hit on only 2 cylinders and those 2 cylinders depend on massive fiat money printing and zero% interest rates.

    This is very disturbing information. I see no way out – other than a collapse – then a fresh rebuild, and praying we don’t turn into a full-blown fascist society (ie, Hitler, Stalin) in the process.

    I’ll be honest, friends. I’m scared. Not for myself. For the kids.

    Reply this comment
  2. Let It Collapse
    Let It Collapse 31 July, 2013, 14:59

    John, I noticed that in your bio that back in the day you were a ruskie lingy in the army. DLI? 98G? Tactical or at a fixed site? Stateside or abroad? A 4-year wonder or did you reup? What % of your time @ DLI was spent at the NCO club? Did you go to Goodfellow? FTA.

    Reply this comment
    • admin
      admin 31 July, 2013, 16:06

      Yes, 98G at DLI, then Goodfellow and Ft. Devens. Then to West Germany at Hoechst, 856 ASA/533 CEWI, mobile unit. But I did spend 2 months at Augsburg. Four years, 78-82. At DLI, my friends and I mostly went down Fisherman’s Wharf.

      — John Seiler

      Reply this comment
  3. The Ted Steele Conceptual Abstraction Unit
    The Ted Steele Conceptual Abstraction Unit 31 July, 2013, 16:01

    “I am predicting a huge crash. Don’t know exactly when” !

    LMAO—- Yes, he’s right! And I predict–

    A huge recovery, but I don’t know when.

    A World Series, but I don’t know the teams who’ll play.

    The Repub’s will spend time vainly repealing Obamacare.

    Anthony Weiner will text more pics, but I don’t know to who.


    Reply this comment
  4. Let It Collapse
    Let It Collapse 31 July, 2013, 17:18

    John, tactical @ Hoechst was better than a poke in the eye with a sharp stick. It could have been worse. You could’ve gone to Hood. Augsburg was cool. But not as nice as Berlin, even with the rotation shifts. No field exercises. Clean the dust from the M-16 once a month and you’re done. Nice warm substation. I wouldn’t know how to construct a half-shelter if my lived depended on it. I shook hands with General Haig when he visited. You know. Nixon’s buddy. Only a little guy. Probably only 5’6 with heels. We spent a full month in advance cleaning the positions with toothbrushes. He stopped in for 5-10 minutes and left. Man, do I have some stories. DLI NCO club was wild with all 4 service branches on post. You can imagine the uproar when the band played all 4 service hymns. The MP’s were always on standby right before the band cranked out the music. Wow. Those were the days. Were you at DLI when the ruskie lingies filed suit against the army for allegedly promising them overseas assignments after language training and then cutting orders for Hood? Or was that after your time? Wow. Boy, did they ever get blindsided when the SF court lifted the injunction. Poof. All disappeared!

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  5. Let It Collapse
    Let It Collapse 31 July, 2013, 17:28

    Mr. Steele, just keep your eye on that quarterly GDP growth. That should tell you whatever you need to know if you have any aptitude at all for economics. A few more 1.1% – 1.7% quarterlies and hold onto your chair. The Ben and Barack Show will get cancelled. And keep your eye on China and Japan too. Both are just treading water at the moment. And there are no reserves left to bail them out. If one goes south – Geronimo!!!!!!!!

    But that’s just my opinion. You are entitled to believe whatever you want. They tell me it’s still a free country.

    Reply this comment
  6. admin
    admin 31 July, 2013, 21:33

    Let: Duty at Hoechst then wasn’t too bad. I loved going out in the field on maneuvers. Barracks duty wasn’t pleasant; too many rules. But the only really bad part was that, 1979-80, the equipment was really old and some people I knew got hurt when their jeeps crashed. Late 1980 started seeing replacement equipment. But, hey, it wasn’t wartime. Which, if it had happened, would have been “nuclear combat toe-to-toe with the Russkies,” to quote Maj. Kong.

    I never heard about the lawsuit. I left DLI April 1979. Must have been later. Tell me about it. I knew when I signed up the Army could send me wherever it wanted, or switch me to learning another language. I should have taken Korean; by now I’d be an executive at Hyundai America.

    But in 1978-79, there definitely was a shortage of Russian linguists, esp. in field units. I think the 856/533 had 15% of its full contingent. So I got what I signed up for.

    — John Seiler

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  7. Ulysses Uhaul
    Ulysses Uhaul 31 July, 2013, 22:00

    What is with all the negativity……readers could end up in little white coats…so sad….this Collapse person need Geritrol or prunes or something!

    Reply this comment
  8. Let It Collapse
    Let It Collapse 31 July, 2013, 23:15

    JS, Russian is not an easy language to learn. The training was about a year, right? German was only about 32 weeks. Probably the hardest language to learn was Chinese Mandarin. About 18 mos. if I recall correctly. I never saw the Chinese lingies at the club, the beach, down around town or 17 mi drive at all. They were always studying. I felt sorry for ’em. And the attrition rate was pretty high too. I don’t think I would have survived it. It’s more than another language. It’s another completely different way of thinking.

    Nah, the lawsuit happened before your time. In ’75-’76. But surprised you never heard about it. It involved about a dozen or more ruskie lingies. All claimed that they were promised overseas assignments by the recruiters but got orders cut for tactical units at Hood toward the end of training. They hired counsel and fought it. I heard as soon as the injunction was lifted their MOS were changed to 11B and they got scattered all over the country. That was the end of that. It’s pretty darn hard to beat Uncle Sam.

    I worked with lots of ruskie lingies. No shortage where I was. The good ones became transcribers. Of course the Field Station was mothballed years ago. No reason to keep it. But I understand the structures are still there. We were housed at the old barracks called Andrews Kaserne – where Hitler’s SS troops were stationed in WW2. Some of the guys claimed that they saw nazi ghosts in the hallways at night. Of course the wall was up at that time. I used to ride my bike through the Grunewald to work. I got chased by wild sows more than once at night. Real lucky I never got caught. Otherwise I wouldn’t be in this discussion. I was more scared of the darn hogs than I was of the Ost Deutsche soldaten patrolling the borders.

    Boy, do I ever miss those german bratwursts mit senf and that dark german beer. The exchange rate when I was over there was about 2.75 west marks per dollar. But you could get 11 ost marks for every dollar. So we used to get together about 20 guys and a senior NCO (E-8) chaperone and go to the east on a bus for a 7-course meal. Sauerbraten, jaegerschnitzel, kartofeln salat, rotkohl, pommes frites, chocolate mousse, wine, beer, etc… for about $8 US dollars each. Some of the best food I’ve ever eaten.

    The hardest part of the tour were the rotation shifts. A week of days, a week of eves, a week of mids over and over and over again….Try that for about 2 years sometime. I didn’t know whether I was coming from or going to work sometimes. Very hard on the body. They finally went to straight shifts toward the end of my tour. What a relief.

    But I got no complaints about the army. I got what I wanted plus more. I lucked out. Some weren’t so lucky. Real good experience for a kid. But I don’t think I would’ve lasted 20 years. I don’t have much of a tolerance level for BS.

    Reply this comment
    • admin
      admin 1 August, 2013, 07:58

      I remember those rotation shifts at Augsburg. The Army had us do 8 am-4 pm (if those were the correct hours) one week. Then the next week it would go BACK 8 hours, to 12 am-8 am. Und so weiter. I read somewhere that that’s the wrong way to do it, that it produces fatigue real fast. The right way is to ADVANCE it 8 hours at a time. But I guess they saved money that way for the generals’ bennies.

      I never went to the DDR. But some friends did and bought some great classical records for something like $1 each.

      When I was in West Germany, 1979-82, the dollar was nearly worthless after the Nixon Shock (see my article); and President Carter grinned as he gave us a 6 percent raise — with dollar inflation at 13 percent. Reagan was prez my last year there and all those areas got a little better.

      At Hoechst, we had so few linguists we spent most of our time in the motor pool fixing the rickety trucks, jeeps and equipment. But I didn’t mind that. We were outside and away from the barracks.

      — John Seiler

      Reply this comment
  9. Let It Collapse
    Let It Collapse 1 August, 2013, 08:39

    Augsburg was in the beautiful part of Germany – Bavaria. If you happened to be a skiier it would have been paradise – next to Garmish, Berchtesgaden and not far from the Austrian border. But I thought you guys had to go out into the field on exercises about 4 months out of the year? I don’t know. I’ve always preferred sleeping in a soft bed. But that’s just me. Oh, we had practice alerts occasionally in the middle of the night. Other than that and cleaning the dust from the barrels of our M-16’s once a month. Yeah, those rotation shifts were pure hell. I think they discontinued them about a year before I left due to all the sick calls. Immune systems were not working properly and they were having a hard time adequately staffing the facility. The human body just isn’t made for that. One week 8am-4pm, next week 4pm-midnite, next week midnite-8am. Try that for 2 years sometime. Torture. Only a young person could tolerate it. Oh, about a year before I left they implemented PT too. We had to run a mile in 12 minutes or less. Not that hard to do. But quite a few had to go on remedial training until they could crack the 12 minute minimum. Why lingies had to do that….I’ll never know. If the ruskies invaded where the hell would we run anyway in an enclosed city? More army nonsense.

    What was the exchange rate when you left? Under 2 west marks per dollar? Probably 1.75. Right?

    Did you graduate U of M before or after your stint in the army? Did you ever consider OCS?

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  10. admin
    admin 1 August, 2013, 09:32

    Exchange rate was about 1.67 in 1979-80. After Reagan/Volcker, it went up to about 2.2.

    I went skiing a couple of times in Garmisch.

    I wanted to go to FS Augsburg permanently until I did it temporarily. I hated listening to the static 8 hours a day. And I hated the reverse shift rotation. The still were there 1979-80. MoPo was better.

    Field exercises maybe 2 mos. total every year. Reforger was 2 weeks. Some smaller deployments, plus alerts every few weeks, where we went out to somewhere in the Fulda Gap for a day.

    We also went up to a small field station, can’t remember the name, about 2 hours N. of Frankfurt. A couple of days maybe every 5 mos. Just a couple of guys (or girls) were there permanently. We set up our trucks and listened to the Red Army. That was great duty because the Army paid for us to eat in German restaurants. (Thanks, U.S. taxpayers!)

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  11. Let It Collapse
    Let It Collapse 1 August, 2013, 10:30

    I supposed you visited Eagles Nest, huh? Man, what a view! Hitler sure knew how to live in style until he couldn’t anymore. But I actually liked the german people. Oh sure, they were a little standoffish and distant – but hell, who wouldn’t be after what they went through? But the germans were always honest and straightforward with me. I liked that. I never had to guess where they stood on anything. And all of them know who their elected officials were and were up to date on german legislation. And the openness and honesty over what happened during WW2 shocked me when I intermingled with a few of them. I put myself in their shoes. How would I like it if tanks and US military equipment were rolling up and down my street 24/7? But I guess that’s the price you pay when you lose a war. Not making excuses for the germans, btw. Germany did some pretty nasty things. So did we. But not all the german citizens were complicit. Many didn’t understand that. Still don’t. They do have a beautiful country and very culturally sophisticated to a common American who is inundated with banks and gas stations.

    Reply this comment
  12. Ulysses Uhaul
    Ulysses Uhaul 1 August, 2013, 13:17

    It is nice old people have a nice spot to hug and talk the good old days and enjoy lime jello with pineapple on top!

    Reply this comment
  13. Let It Collapse
    Let It Collapse 2 August, 2013, 08:54

    UU, respect your elders, young man! We lived what you might have read about in history class!

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  14. Let It Collapse
    Let It Collapse 2 August, 2013, 09:00

    JS, I assume you were enlisted. After 4 years did you ETS as a Spec4 or a Sgt?

    Reply this comment
  15. Let It Collapse
    Let It Collapse 2 August, 2013, 15:01

    JS, for some reason I just can’t picture you in the army. Round hole square peg sort of thing. But then you probably think likewise of me. Funny how people take certain twists and turns in life, isn’t it? I guess had I not passed that nonsense language test that the recruiter gave me as a young dumb kid my life would have taken a different direction. I wasn’t too bright but I was bright enough to know that I didn’t want to drive a tank or jump from airplanes. But I can’t complain. I learned alot in that short tour of duty. And I met lots of nice people who also decided to work and toe the line for the man. They offered me some nice coin and a choice of duty station to reup. Coulda returned to DLI. But it just wasn’t in my heart. I heard the call of the wild and just had to leave. And so it is……

    Do you stay in touch with any of the troops or ever go to a reunion? There’s one coming up in the vaterland in the fall. I won’t be able to attend. When I talk to old time buddies we can talk for hours. Amazing how many stories accumulate in a tour of duty. And I never ever heard a shot fired except by the VoPo on the other side of the wall.

    There are a couple conversations I’d like to have with a couple E-6’s. And they wouldn’t be too friendly either.

    Reply this comment
    • admin
      admin 2 August, 2013, 15:07

      “I just can’t picture you in the army.” A lot of people say that.

      I keep up with some buddies from the Army. But no reunions.

      I got pretty much what the Army promised me. A lot of people can’t say that.

      I gave the Army four good years and we beat the commies.

      — John

      Reply this comment
  16. Let It Collapse
    Let It Collapse 2 August, 2013, 15:10

    “I gave them four good years and we beat the commies.”

    I gotta disagree with you there, Sarge.

    We didn’t really beat ’em. We outspent ’em. That’s all. They ran out of money and we didn’t – until a few years later.

    And today in many respects we’ve turned into them.

    So there ya go. We’ve come full circle.

    Reply this comment

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