4 ms·

Looks like Great Depression, 1979/1980, and right after the Great Recession. What is the significance of 79/80?

by Dig1t 3y ago

strangesmells06 3y ago
It was the most severe recession since the Great depression lol good times /s https://en.m.wikipedia.org/wiki/Early_1980s_recession https://en.m.wikipedia.org/wiki/Early_1980s_recession Good time to buy defense contractor stock because one way to get out of serious depressions/recession is a war. And the presidential election is next year...
- Buttons840 3y ago
  Those previous recessions were marked by high unemployment, right? But currently we have record low unemployment. Is the high unemployment on its way, or is this something new?
  - strangesmells06 3y ago
    I guess it depends on how you define unemployment. Over half of of employed people nowadays don't make enough to pay their fundamental bills and/or live paycheck to paycheck and have to take up huge debt to make it every month. so while they technically have a "job"...is it really if it doesnt cover their bills? classifying something as a job is extremely bullshitable.
    - deleted 3y ago
      [deleted]
- sickofparadox 3y ago
  I wonder how the US army feels about a South American venture this time? Given the things happening in Guyana.
  - nextweek2 3y ago
    Given how small the Venezuelan military is, I’d wager the Americans would see it as too easy. What Guyana needs is to invite the British and American military in for a joint “training” exercise. The uk has a nice new aircraft carrier that could do with a shake down.
I_Am_Nous 3y ago
There was an energy crisis related to unrest in Iran, the Iraqi invasion of Iran, and the oil output fluctuating as a result.
AnimalMuppet 3y ago
Interest rates spiked as the Fed tried to address inflation. Gold serves, in essence, as a short against paper currency. When inflation is running 14%, gold looks like a good alternative. So everyone was buying gold.
- deleted 3y ago
  [deleted]
ortusdux 3y ago
Gold is generally considered a hedge against inflation. https://www.forbes.com/advisor/investing/gold-inflation-hedge/ https://www.forbes.com/advisor/investing/gold-inflation-hedg...
- ajross 3y ago
  And by bidding it up at the end of a period of inflation, those trying to hedge burned themselves. Same thing is happening now: inflation is back down to baseline, but people think it's high because prices are higher than they were (brains have trouble with reasoning based on derivatives of functions). Basically gold is, as it always has been, a sucker's bet. All the people buying it now are probably going to lose money.
  - ortusdux 3y ago
    Yep. The key is to buy it 6 months ago, and then do everything you can to get others to continue buying in.
  - AnimalMuppet 3y ago
    1979/80 wasn't the end of the inflation. Especially 1979. But even later... there's a lag time in peoples' minds and, especially, emotions. When inflation has gone up to 10%, it's a huge surprise, but your mind is still back on 6% or 8%. When it comes back down to 10%, your mind is still on the 14% it was, not on the 6% or 8% it's (maybe) headed back to.
  - ta_billlegrand 3y ago
    Since Nixon ended the convertibility of the US dollar to gold (at $35/oz) in 1971, the price of gold in dollars has increased at about 8% a year. The S&P 500 over that time frame has returned a bit over 10% a year. If gold has been a sucker's bet, stocks have been barely less of one. Of course, the correlation between gold prices and stock prices is quite low, so a blended portfolio (occasionally rebalanced) would have outperformed a 100% allocation to either with less volatility.
    - 3y ago
blacksqr 3y ago
It was a period of what was called "stagflation", economic stagnation combined with inflation. It was supposed to be impossible to have the two happen at once, and no one knew what the hell was going on. Gold seems attractive in periods of uncertainty.
tomrod 3y ago
Volcker and stagflation. Rather than fix the economy by raising rates and being accused of politics, Fed kept rates artificially low (which, incidentally, attributed somewhat to the US political shift that year).
incomingpain 3y ago
Here's a better way to look at it. What was 65 years(retirement age) year before each of these.I'll do it for you. So 1930 - 65 = 1865. The end of the American Civil war. 1979 - 65 = 1914. The end of WW1 2009 - 65 = 1944. The end of WW2 Each of these events correspond with a major baby boom post war and subsequent major retirement period. These financial crisis are a consequence of major war. Economists figured this out ages ago and now understand how to prevent future recessions. So how about covid? 2020 - 65 = 1955 end of korean war. It was simple to predict "covid" and guess what I was invested in on January 2020. Large cap healthcare. Big box consumer staples. All the stuff that would stay open. Also an interesting discovery. No amount of money printing keeps the economy afloat, you must let it crash. 2040 is the next big one for vietnam, but that was a long war. Might not be the same. Might be harder to predict.
jeffbee 3y ago
Peak blood lead levels.
randomdata 3y ago
~1980, ~2010, and ~2020 are the three times it was higher, inflation adjusted. The Great Depression era doesn't come close (and is also well outside of the 50 year window given).
- blacksqr 3y ago
  Trading in gold was banned in 1933 in the United States. The price was set by the government at $35/oz. The ban wasn't lifted until 1974, at which time the price skyrocketed.

Looks like Great Depression, 1979/1980, and right after the Great Recession. What is the significance of 79/80?

by Dig1t 3y ago

Looks like Great Depression, 1979/1980, and right after the Great Recession. What is the significance of 79/80?

It was the most severe recession since the Great depression lol good times /s https://en.m.wikipedia.org/wiki/Early_1980s_recession https://en.m.wikipedia.org/wiki/Early_1980s_recession Good time to buy defense contractor stock because one way to get out of serious depressions/recession is a war. And the presidential election is next year...

Buttons840 3y ago
Those previous recessions were marked by high unemployment, right? But currently we have record low unemployment. Is the high unemployment on its way, or is this something new?
- strangesmells06 3y ago
  I guess it depends on how you define unemployment. Over half of of employed people nowadays don't make enough to pay their fundamental bills and/or live paycheck to paycheck and have to take up huge debt to make it every month. so while they technically have a "job"...is it really if it doesnt cover their bills? classifying something as a job is extremely bullshitable.
  - deleted 3y ago
    [deleted]
sickofparadox 3y ago
I wonder how the US army feels about a South American venture this time? Given the things happening in Guyana.
- nextweek2 3y ago
  Given how small the Venezuelan military is, I’d wager the Americans would see it as too easy. What Guyana needs is to invite the British and American military in for a joint “training” exercise. The uk has a nice new aircraft carrier that could do with a shake down.

I_Am_Nous 3y ago

There was an energy crisis related to unrest in Iran, the Iraqi invasion of Iran, and the oil output fluctuating as a result.

AnimalMuppet 3y ago

Interest rates spiked as the Fed tried to address inflation. Gold serves, in essence, as a short against paper currency. When inflation is running 14%, gold looks like a good alternative. So everyone was buying gold.

deleted 3y ago
[deleted]

ortusdux 3y ago

Gold is generally considered a hedge against inflation. https://www.forbes.com/advisor/investing/gold-inflation-hedge/ https://www.forbes.com/advisor/investing/gold-inflation-hedg...

ajross 3y ago
And by bidding it up at the end of a period of inflation, those trying to hedge burned themselves. Same thing is happening now: inflation is back down to baseline, but people think it's high because prices are higher than they were (brains have trouble with reasoning based on derivatives of functions). Basically gold is, as it always has been, a sucker's bet. All the people buying it now are probably going to lose money.
- ortusdux 3y ago
  Yep. The key is to buy it 6 months ago, and then do everything you can to get others to continue buying in.
- AnimalMuppet 3y ago
  1979/80 wasn't the end of the inflation. Especially 1979. But even later... there's a lag time in peoples' minds and, especially, emotions. When inflation has gone up to 10%, it's a huge surprise, but your mind is still back on 6% or 8%. When it comes back down to 10%, your mind is still on the 14% it was, not on the 6% or 8% it's (maybe) headed back to.
- ta_billlegrand 3y ago
  Since Nixon ended the convertibility of the US dollar to gold (at $35/oz) in 1971, the price of gold in dollars has increased at about 8% a year. The S&P 500 over that time frame has returned a bit over 10% a year. If gold has been a sucker's bet, stocks have been barely less of one. Of course, the correlation between gold prices and stock prices is quite low, so a blended portfolio (occasionally rebalanced) would have outperformed a 100% allocation to either with less volatility.
  - 3y ago

blacksqr 3y ago

It was a period of what was called "stagflation", economic stagnation combined with inflation. It was supposed to be impossible to have the two happen at once, and no one knew what the hell was going on. Gold seems attractive in periods of uncertainty.

tomrod 3y ago

Volcker and stagflation. Rather than fix the economy by raising rates and being accused of politics, Fed kept rates artificially low (which, incidentally, attributed somewhat to the US political shift that year).

incomingpain 3y ago

Here's a better way to look at it. What was 65 years(retirement age) year before each of these.I'll do it for you. So 1930 - 65 = 1865. The end of the American Civil war. 1979 - 65 = 1914. The end of WW1 2009 - 65 = 1944. The end of WW2 Each of these events correspond with a major baby boom post war and subsequent major retirement period. These financial crisis are a consequence of major war. Economists figured this out ages ago and now understand how to prevent future recessions. So how about covid? 2020 - 65 = 1955 end of korean war. It was simple to predict "covid" and guess what I was invested in on January 2020. Large cap healthcare. Big box consumer staples. All the stuff that would stay open. Also an interesting discovery. No amount of money printing keeps the economy afloat, you must let it crash. 2040 is the next big one for vietnam, but that was a long war. Might not be the same. Might be harder to predict.

jeffbee 3y ago

Peak blood lead levels.

randomdata 3y ago

~1980, ~2010, and ~2020 are the three times it was higher, inflation adjusted. The Great Depression era doesn't come close (and is also well outside of the 50 year window given).

blacksqr 3y ago
Trading in gold was banned in 1933 in the United States. The price was set by the government at $35/oz. The ban wasn't lifted until 1974, at which time the price skyrocketed.