Wednesday, July 20, 2022

Is 2022 similar to 1973?

I think before I have made the analogy that Trump is like Nixon, and Biden is like Carter.

What made me think of this now is this article:  David Stockman: How the Fed fostered double-digit inflation…..again!  "We don’t really care if June marked the inflation peak or not. Yesterday’s revelation that wholesale (PPI) commodity prices rose by 23.4% on a Y/Y basis in June is the far more important data point. The only competitor during the past three-quarters century was the very same 23.4% Y/Y gain registered in November 1974 on the heels of the Arab oil embargo and the Fed’s money-pumping spree during Nixon’s last years in office."

Look at the stock market crash of 1973-1974.  "In the 694 days between 11 January 1973 and 6 December 1974, the New York Stock Exchange's Dow Jones Industrial Average benchmark suffered the seventh-worst bear market in its history, losing over 45% of its value."

The current crash also started in January.  On January 3, 2022, the DJIA reached its all time high of 36,800 and it has declined about 13% since then.

The 1973-1974 recession lasted from November 1973 to March 1975.  We know a recession is coming we don't know when (or if it has already started).  But if there is a 49 year cycle, then we can expect a recession to begin in November 2022 and last until March 2024.  And of course, a recession means that the Treasury will issue trillions in new debt and the Fed will print trillions of new electronic dollars, which will mean more inflation.

Let's look at inflation rates in the 1970s.  The 1973 inflation rate was 6.22%.  The 1974 rate was 11.04%, and the 1975 rate was 9.13%.  The 2022 inflation rate is currently at 9.1%.   

I think I proved my point.  The 70s are back, baby.  Are there any other parallels, like in cultural trends?  

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