Today James Turk told King World News that the United States may be about to make real money great again!
James Turk: “Investors should not get too excited by the Dow Jones Industrials Average finally breaking above 20,000, Eric. First of all, we all know the dollar is losing value from inflation. So 20,000 on the Dow today is a lot different than what 20,000 on the Dow would have meant five or ten years ago. Today the dollar has a lot less purchasing power and it continues to erode month-by-month.
Egon von Greyerz did a good job explaining this point in the excellent interview he did with you this weekend. But there is another reason to avoid getting caught up in the Dow 20,000 euphoria…
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The Hairy 1970s
The intense excitement about the DJIA prevailing today is very similar to what it was in January 1973, when the DJIA hurdled above the 1,000 level. That event caused many investors to think that the DJIA was destined to soar onward and upward into the blue sky. After all, the 1000 level had stopped the 2-decade long post World War II bull market in stocks. So finally breaking above that barrier was seen as good news, but it wasn’t to be. The long bull market back then had become fairly wild by the 1960s, with rampant speculation, and it was also being fed by a very accommodative Federal Reserve.
The Fed pumped up its money printing to finance the federal government’s growing deficit resulting from President Johnson’s big increases in spending that was to pay for new social welfare programs while also fighting a budget-busting war in Viet Nam. After the 1000 peak, the DJIA went through a tough bear market in the early 1970s, with some notable bankruptcies. These bankruptcies included the collapse of PennCentral, which itself was the amalgamation of two previously great companies, the Pennsylvania and New York Central railroads. At the time it’s collapse was the largest bankruptcy in U.S. history.
From its early-1970s low, the DJIA started climbing again. President Nixon was re-elected in November 1972, and indications were that the economy was doing all right. By January 1973, in the post-election euphoria, the DJIA managed to climb above 1,000, which by then was deemed to be a seemingly impenetrable level. But given that the psychological hurdle level of 1,000 was finally broken with a new record high, all seemed well. Yet little more than 18 months later the DJIA had lost 40% of its value by falling back toward 600.
So do I think stocks are headed for a major bear market? Yes, when the DJIA is measured in terms of gold. This is also what Egon von Greyerz has been stressing lately in his KWN interviews. But it will continue to be a bull market when measured in nominal dollars. In other words, I expect the DJIA to move above 20,000 because inflation of the dollar will continue. Inflation is also starting to accelerate.
Of course there will be some 10% or more corrections from time to time, like we saw last year as well as the year before. But the trend remains up because the dollar continues to get debased from mismanagement by the Federal Reserve and the never-ending federal deficits. The only way to finance those deficits is by printing new money, which means Fed engineered inflation, which brings me to another point I would like to mention.
Make Money Great Again
There is a grass-roots campaign developing to Make Money Great Again, which I think is the necessary first step to making America great again. So as President Trump begins his second week in office, I encourage everyone to visit MMGA.org. There you can sign the petition to Make Money Great Again. It asks President Trump to sign an Executive Order that allows gold and silver to circulate once again as currency by removing all impediments on them, such as taxes. Doing that would give Americans a choice in currency. Most importantly, it would enable everyone, if they so chose, to once again use sound money in day-to-day commerce.
***KWN has just released the powerful audio interview with James Turk and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Greyerz – We Now Have The Perfect Recipe For A Global Disaster CLICK HERE.
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