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March 15, 2008

Why the U.S. Economy is in the Dumps

I wish I would have seen this earlier:

The true bull market ended long ago with the purchasing power of the DJIA crashing.  The DOW divided by gold indicates a significant drop (less than 1/3) in purchasing power.  This is not just a bear market but a near collapse.

Quite simply, the market sets the interest rates and not the Fed.  A rise in interest rate actually means a good economy (more people want to borrow).  As rates go down so does stock prices.  Robert Prechter suggests safety - "In a nutshell people should be in the safest cash equivalents that we can find."  After the bear is gone, he suggests using your cash to buy stock at a discounted priced.

Posted by Vital at March 15, 2008 9:52 PM