Saturday, October 17, 2009

Dow 10,000! Uh Really?

This has happened before, not too long ago in fact. Each time I turned the channel from one financial station to the other yesterday and this afternoon, I thought I was watching a scandalous XXX movie. I kept hearing, "Oh Yes!...OH GOD, OH YES! That's the stuff 'Big Ben and Timmah' know how I like it. Oh my GOD!!" Was I hearing an audio replay of Mr. Spitzer's liaisons with his high priced call-girls? Nope. I was once again witnessing the on-air hosts experiencing multiple DowGasms.

After all, isn't Dow 10,000 exciting? Dow 10,000? Uh, really? Not so much. As usual, the so-called financial experts are not giving you the whole story. And why would they? The truth sucks.

The truth lies with the value of the US dollar. Another great illustration of the amazing loss of purchasing power by the US public are the recent ignorant statements about the Dow at 10,000. While in absolute terms the Dow may cross whatever the Fed thinks is a sufficient mark before its quantitative easing begins to taper off (Dow crosses 10k just as Treasury purchases expire), the truth is that over the past 10 years (the first time the DJIA was at 10,000) the dollar has lost 25% of its value...TWENTY FIVE percent!

On a real basis (not nominal) the Dow at 10,000 ten years ago is equivalent to about 7,500 today! In other words, not only have we had a lost decade for all those who focus on the absolute flatness of the DJIA, but it is also a decade where the consumer has lost 25% of its purchasing power from the perspective of stocks! You won't hear this fact on TV.

You don't believe me? The value of the US dollar only effects high-flying world travelers you say? Huh - that's odd. Then why did President Obama give a special $15-billion "bailout" to the elderly this past February? It was part of the "spendulus bill" in case you forgot. By definition they're already retired so they haven't lost their employment. They are losing their purchasing power, like you, so the Pres stepped in for a lil' bailout.

What else should we expect with trillions upon trillions of new dollars flooding into the system via the Fed's printing machine? It makes the money supply that was available before the money & credit that was created out of thin air worth less than other wise would be.

President Obama, Helicopter-Ben at the Fed, and Tax-Cheatin-Timmy at the Treasury all apparently want the U.S. currency to be used as Kleenex and toilet paper.
With such a great reaction by the media to Dow 10,000, Big Ben and Tax-Cheatin-Timmy must be receiving many messages: "Hey big boy, voulez vous coucher avec moi?"

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