Chapter Seven - What's the Value?

  • Thread starter CaptainDan
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Aug 2, 2020
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Boy, Mike Maloney had no idea what was to come. In this first section of chapter seven, he talks about how the Dow Jones' value was creeping past $13,000 and heading towards $14,000. He makes light of the situation and talks about the Dow shooting past $20,000 or dipping under $10,000 in the future. I'm guessing this was around 2008, just before the big real estate and market crash. If anyone wondered what the Fed was going to do about that crash, the verdict is in. They were going to print money. Do you know how I know they were going to print money? Because they did. As I write this, it's 2021, we just had one of the worst real recessions in history because of the COVID-19 pandemic and yet, the Dow is currently priced at $33,991.73. When they print, they sure do print. I feel bad for those who decided to "play it safe" and keep their cash in the bank and not invest in the stock market. From then until now, the market has screamed while cash has lost a tremendous amount of value. Don't believe me? Go buy a Ford pickup truck that would have cost $25,000 a few decades ago. It will cost you $65,000 today.

I remember listening to the news back near 2008. Ben Bernanke of the Federal Reserve was being interviewed and was asked how much liquidity would need to be injected into the economy to overcome the damage from the housing bubble and other bubbles from the decade before his interview. Would it be a few billion? A trillion? Do you know what he said? His reply was that the Federal Reserve would need to inject 100 trillion dollars into the economy. Right there, I knew I needed to get my money into the market because what they refer to as "quantitative easing" only does one thing. It pumps up the stock market. If you look at the S&P 500 or the Dow Jones Industrial Average over the past 13 years, you'll see exactly what I'm talking about.

Check this out. Look at the market beginning in 2009. This is what funny money does to an economy. This increase isn't from company earnings or efficiencies. This is all from Fed intervention via government debt, security purchases, and whatever else they do.


I wonder how long they'll pump and what the end result will be. I also wonder if they are merely reacting to existing conditions or if this was all pre-planned. I mean, you have to think and hope it was pre-planned. No one could actually be this bad at banking.

Mike says that no matter how many dollars it currently takes to buy a house or by the Dow Jones, both of those things are and have been crashing for years. I'm assuming he's referring to their value versus the value of gold.

This post is part of a series: Guide to Investing in Gold & Silver by Michael Maloney
Chapter Seven - What's the Value? was posted on 06-03-2021 by CaptainDan in the Economics Forum forum.
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