Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Something Investors Can Be Thankful For!

Stock-Markets / Stock Markets 2011 Nov 26, 2011 - 11:29 AM GMT

By: Sy_Harding

Stock-Markets Best Financial Markets Analysis ArticleHeadlines have been full of gloom and doom for some time; high unemployment, the housing industry in a depression, record government debt, governments dysfunctional, and on and on.

Fear-mongers and ‘big picture’ theorists are having a field day with it all.


The record government debt in the U.S. and Europe, the result of the massive 2008-2009 efforts to prevent the Great Recession from falling off a cliff into another Great Depression, can only result in an even worse catastrophe down the road, and an unbearable debt load on the next generation. Devastation is on the way.

But here’s something to be thankful for.

The long-term doomsday scenarios that always pop up during bad times are the result of simply extending whatever is the current trend in a straight line into the future. They almost never materialize because they don’t allow for the changes that take place before they can materialize. In fact, they usually work out to the opposite extreme.

The examples are endless.

In the 1940s, by extending the trend of how fast population growth was taking over former farm land, it became undisputed fact that there would not be enough arable land to feed the growing U.S. population by the year 2000. The hunger and near starvation conditions of the Great Depression would become even worse.

However, farmers learned new soil management, new cattle feeding and breeding techniques. Science developed healthier seeds. Farm machinery manufacturers provided more efficient machinery. And the trend reversed to the opposite extreme of food surpluses, overflowing food warehouses, gifts of surplus grains to foreign countries, even subsidies to farmers to leave their fields unplanted.

For many years the fear-mongering scenario was that communism would soon take over the world. The USSR was a powerful nuclear-armed world power. Under Russia and China’s sponsorship, communism was spreading around the globe, even to the western hemisphere with its arrival in Cuba, and Cuba’s successful efforts to move it on into South America. The Korean and Vietnam wars were fought in attempts to halt its onslaught. But as is often the case the eventual reversal was created by the trend itself. In the process of its expansion, the untenable economics of communism were stretched past their limit and the trend reversed, even the USSR and China eventually adopting free market economics.

Failures of big picture analysis were also seen in the repeated fears regarding human survival, such as those that came about by extending the trends of polio, swine flu, Asian flu, AIDS, the depletion of the ozone layer, and so on.

In the 1980’s, the Reagan Administration used massive government spending and stimulus efforts to pull the economy out of the terrible 1970’s. Government debt levels grew to what were then frightening record levels. It was projected the U.S. government would be bankrupt by the year 2000, Social Security would be history, the next generation would face hard times as a result of the debt load. But the doomsday forecasters were extending the current trend, not able to picture the dramatic economic reversal of the 1990s that would reverse the budget deficits to budget surpluses.

By extending that new trend, big picture analysis then became forecasts that the national debt would be completely paid off by the year 2012, Social Security would be fully funded, and there would be funds left over for wider healthcare coverage.

But whoops. Wrong again. Conditions also changed before that long-term scenario could work out. The economy suffered two back-to-back recessions, a terrorist attack, the cost of two wars, and the previous budget surpluses reversed to the current new record debt levels.

So now the big picture scenario has reversed again, its advocates convinced by the current trend that there can be no outcome other than a catastrophic future.

I doubt it. I suspect that once again the seeds for another eventual positive reversal are even being planted within the crisis itself.

When World War II ended, economists warned that returning servicemen should not be discharged right away, but slowly over a period of years. Immediate discharge would have a devastating effect on unemployment levels and guarantee that the slow economy would plunge into the next Great Depression.

But the government rejected the advice and the servicemen were discharged immediately.

And rather than plunging into a Depression, the economy took off into the postwar boom. The returning servicemen had such pent-up yearnings for cars, marriage, homes, furniture, appliances, that factories could hardly keep up with demand, providing jobs in more than adequate numbers.     

I suspect a similar pent-up demand is building within the current slowdown, among those who would like to trade for new cars, would like to buy their first home, or trade up to a larger one for their growing family, but continue to be forced by economic conditions to wait.

Within that pent-up demand lies the makings of another typical reversal from bad times to good. Perhaps even like the 1990’s, when the improving economy providing increased tax flows into the Treasury, grinding away at budget deficits until they became surpluses, and the big picture analysis reversed to seeing only good times ahead.

Unfortunately, first we have to deal with the current gloomy outlook. But I believe longer-term we can at least be thankful for the history that reveals ‘big picture’ analysis and fear-mongering scenarios almost never come to pass, and this current gloomy and difficult period will also end.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2011 Copyright Sy Harding- 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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 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