Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Detroit and Social Credit, Stocks Contnuing Technical Strength

Stock-Markets / Financial Markets 2013 Aug 05, 2013 - 06:21 PM GMT

By: Christopher_Quigley

Stock-Markets

In 2009 I wrote an essay on Social Credit which for some reason has become one of the most popular articles I have ever penned. This, I reckon, is not because it is a particularly “exceptional” essay but due, in part, to timing. Interest in this “economic concept” has recently gone “viral”.


However, it is ironic that Detroit has recently filed for bankruptcy. Research for the piece I wrote on Social Credit helped me discover that it was in the environs of Detroit that the “American Dream” was made manifest by non-other than Henry Ford. Unfortunately it would appear that the lessons that should have been learned from the perspective of Social Credit have been ignored and accordingly the “American Dream” is dying. This is a tragedy. But it is never too late to start anew. As the saying goes: “when you lose, don’t lose the lesson”. To mark this seminal event in the social and economic history of Detroit I outline below the essential essence contained in that 2009 essay. Hopefully the economic truths contained therein, originally championed by Major Clifford Douglas in 1910, will continue to gain appeal and thereby motivate some future administration to take up the baton of reform and instigate credit policies that will help pass on the “American Dream” to new generations.

“What is the main objective of Social Credit? In essence it seeks to fairly compensate citizens with real purchasing power and thus end the current "trans-national/out-sourcing" industrial policy of American and European business leaders. It seeks to replace capital investment (i.e. investment in technology) with human investment.

Why is purchasing power so important? It is fundamental because without money no exchange can take place. In order to understand what I am talking about let us look at the historical example set by Henry Ford in Detroit in 1920. He completely redefined "classical" economics through the policies undertaken by the Ford Motor Company.

Under "normal" economic theory it was assumed that a corporation could only maximise profits by ideally becoming a monopoly which meant increasing price and limiting supply. Ford did the exact opposite. He had a more holistic view of the role of the corporation in society. He understood the synergetic relationship between money and goods. He DOUBLED the wages of his workers, DECREASED the price of the Model T and in the process remade the Ford Motor Corporation and remade America. (This policy was not inflationary because he knew he could at least double production through increased efficiencies when he doubled wages. This is the essence of the enlightened policy of Social Credit for communities rather than of monopoly credit for social elites alone).

The Ford Company boomed. How did this happen? It was axiomatic. He understood the importance of money and purchasing power in society. With "high" wages Ford's workers were able to make a good living and have excess funds to save or spend. Accordingly their financial anxiety ceased and staff turnover dropped by a multiple of five in one year. This dramatically decreased management expense and increased productivity. Workers finally had peace of mind. With the increased disposable income in the Detroit area the general economy boomed. All classes of economic sectors expanded. As a result more workers, new business owners, company managers, insurance brokers, real estate brokers, bankers, salesmen, craftsmen, delivery men, builders, farmers and retailers all could afford Ford cars. Demand for the model T exploded through the increased buying power WHICH HE HAD CREATED THROUGH MONEY DISTRIBUTION.

Like Major Clifford Douglas, the mind behind Social Credit, Ford understood economics and he understood the issue of PURCHASING POWER. FOR HIM PURCHASING POWER WAS NOT CREDIT BUT CASH.  HE REASLIZED THAT WITHOUT THE MONEY TO PURCHASE HIS CARS POTENTIAL DEMAND WAS IRRELEVANT. THEREFORE HE INITIALLY REDISTRIBUTED DIVIDENDS FROM THE OWNERS TO THE WORKERS. THIS INCREASED GENERAL BUSINESS ACTIVITY AND TURNOVER EXPONENTIALLY. THESE INCREASED SALE BOOSTED PROFITS TO SUCH A DEGREE THAT THE SAME OWNERS EVENTUALLY RECEIVED INCREASED SUSTAINABLE DIVIDENDS. EVERYBODY WON. THIS BRILLIANT POLICY MADE THE COMPANY. It built up the economy of Detroit and it helped define America as a country where a factory worker was respected and well paid, not exploited, as had been the case throughout the English industrial revolution. The "American Dream" was Ford’s vision made manifest. It was a dream brought to fruition not through political fantasy but through the hard laws of economics, accounting, finance, production, distribution and marketing.”

To reiterate, in my view the “death” of Detroit is the unmistakable sign the “The American Dream” is dying on its feet. Unless the policies of off-shoring American jobs and the systematic lowering of American working wages cease we are going to see many more U.S. cities going bankrupt.

Social Credit as a policy may not have all the solutions to our contemporary economic crises but it has a part to play. Mainly it is helping people realise that fallacy of championing the use of technology without a concomitant policy in place to distribute money to consumers. Thus as a matter of expediency without the introduction of a National Dividend to stimulate American purchasing power contemporary modernity is going to continue to experience social disintegration. However, for some reason governments cannot seem to come to terms with the “radicalness” of this solution. Radical or not, the truth of the matter is you either “adapt or die” and unfortunately the tragedy of the Detroit bankruptcy saga proves that America is opting to die.

Technical Strength Continues For Now.
The market, though over-bought, continues to show exceptional technical strength.

The strategy of going long on pullbacks and selling into highs remains in place.

How long this approach continues to provide excellent returns is anyone’s guess but one should not “fight a gift horse in the mouth”.

Of the Transports and the Industrials, the Trannies is the strongest Index of the two, despite rising oil prices. Case in point, observe the powerful bullish engulfing candlestick price action on the Transport Index last Friday. It would appear that the Industrials are keen to follow, we shall wait and see. One would have thought that since we are coming to the end of this earnings season there would be a serious pullback, but no, not as we speak.

As reported previously this market strength is not based on fundamentals but on technicals. The FED is walking a tightrope with its QE strategy. How the FED finally gets itself out of the box it has constructed around its policy remains to be seen. Rationally one would assume that when Government debt stops being monetized interest rates will explode. The Gold bear is actually indicating that interest rates could go into double digits soon. Such an event would cripple any real estate “recovery”, seriously negatively alter valuations on dividend paying equities, and push debt crippled European sovereign budgets into fresh crises. However, currently the market is not interested in such “logical consequences”. Therefore traders and investors should “soldier on” and take advantage of the “party” while it lasts, for it cannot go on forever. Reversion to the historical price-earning-ratio-mean is inevitable. Technical analysis will indicate to keen observers when this setup is unfolding. For the moment mean reversion is off the technical radar but as is the nature of this profession we will only believe what we see not what we hear.

Dow Transports: Daily


USO: United States OIL Fund ETF: Daily

Charts: Courtesy of StockCharts.Com

Ref: “Robots Don’t Buy Cars: Henry Ford and Social Credit” 2009 Christopher M. Quigley

By Christopher M. Quigley

B.Sc., M.M.I.I. Grad., M.A.
http://www.wealthbuilder.ie

Mr. Quigley was born in 1958 in Dublin, Ireland. He holds a Bachelor Degree in Accounting and Management from Trinity College Dublin and is a graduate of the Marketing Institute of Ireland. He commenced investing in the stock market in 1989 in Belmont, California where he lived for 6 years. He has developed the Wealthbuilder investment and trading course over the last two decades as a result of research, study and experience. This system marries fundamental analysis with technical analysis and focuses on momentum, value and pension strategies.

Since 2007 Mr. Quigley has written over 80 articles which have been published on popular web   sites based in California, New York, London and Dublin.

Mr. Quigley is now lives in Dublin, Ireland and Tampa Bay, Florida.

© 2013 Copyright Christopher M. Quigley - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Christopher M. Quigley Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules