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My Favorite Chart on Earth

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Re: My Favorite Chart on Earth

#21

Post by 6ren »

MattyDub wrote: post #11
qq66 wrote: post #3

Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."

I think you're missing the post's author's point. He isn't saying "after wars the DJIA goes up", he's saying "after periods of inflation, the DJIA goes up" (see the title of the graph). Note he still doesn't mention 1929-1933, which seems like a big omission, although it doesn't directly contradict the assertion.

Interestingly, there is no CPI increase accompanying the present period. Maybe it's delayed a bit, as it was for WWII.

Re: My Favorite Chart on Earth

#22

Post by Symmetry »

knowledgesale wrote: post #19
edge17 wrote: post #15

Earlier quoted context omitted.

remember Moore's law? that was based on two or three data points :)

a reference to back up this particular claim maybe?

Moore's diagram's in his origonal paper, presumably. However, while he only plotted a few data points he presumably used his experience with the semi-conductor industry in general and so actually had more.

ftp://download.intel.com/museum/Moores_Law/Articles-Press_Releases/Gordon_Moore_1965_Article.pdf

Re: My Favorite Chart on Earth

#23

Post by Keyframe »

edge17 wrote: post #15
charlesju wrote: post #14

I love how economists make all sorts or ridiculous claims by looking at the historical stock market. Two or three data points is not a trend, if you have 3 users and they all register, that doesn't mean your conversion rate is 100%. Sometimes we forget that 100 years of data is nothing compared to human history and does not signify anything about the future.

remember Moore's law? that was based on two or three data points :)

but was it a self-fulfilling prophecy?

Re: My Favorite Chart on Earth

#24

Post by TomOfTTB »

throw_away wrote: post #5
qq66 wrote: post #3

Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."

I don't know if I'm the chorus you're talking about, but they were both much shorter than the ones marked (gulf war 1: 90-91, korea: 50-53). If he shaded those boxes as well to the graph, I don't see it "ruining" his argument. The growth in those four years wasn't exactly spectacular. Very slightly up at best.

The U.S. was only in WWII from 41-45. It was only in WWI from 1917-1918.

Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. To give one example the initial Afghan offensive only involved about 1,300 ground troops. As of 2003 that number was still only at 10,000 (http://www.cbsnews.com/stories/2009/12/01/ap/government/main...)

That's around the same number we had in Somalia (5,300), the '89 Panama invasion (30,000) and several other conflicts. So the fact that the chart starts to level off as of 2001 while these other conflicts don't seem to have made an impact undermines the implied point

Re: My Favorite Chart on Earth

#25

Post by burgerbrain »

jamesaguilar wrote: post #10
nc17 wrote: post #8

Out of six or seven wars, he picks the ones that make his case. This guy (and anyone tempted to draw any conclusions from this chart) should read A Random Walk Down Wall Street. http://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

Which other relatively long or expensive wars are missing from this? Wouldn't the length of a war be difficult to estimate at the outset, and hence be priced in to stock market growth over time? In my economics class they taught us that war is bad for the (real) economy because the country is relatively more invested in the engines of destruction than production, and thus productivity growth in things that make life…

Korea.

But to be fair, Korea was dwarfed by WWII and Vietnam in cost and public awareness. For example, did you know that we're currently technically still at war with North Korea? There's only a cease-fire, no treaty. We still even have troops over there...

Re: My Favorite Chart on Earth

#26

Post by redthrowaway »

nostrademons wrote: post #17
qq66 wrote: post #3

Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."

They aren't different. There was a post-Korea inflationary period and subsequent recession in 1953-1954 as the Fed restricted monetary policy to quell the inflation: http://en.wikipedia.org/wiki/Recession_of_1953 There was also a recession brought on by the oil price spikes of the First Gulf War: http://en.wikipedia.org/wiki/Early_1990s_recession The trend still holds up, it just wasn't worth mentioning in those case…

>I'm more interested in why we got the Great Depression in a period of relative peace.

Speculation. There were very few regulations on the stock market, which led to massive growth across the board. As a result, average people invested their savings in the stock market, because they were all but guaranteed double-digit ROIs. Problem is, stock prices were based on the inflationary pressure of increased investment, not the actual revenues of the companies themselves. When the bubble burst, it hurt everyone. People were worried that their savings would be lost, so they rushed to the banks to withdraw all their money, but the banks didn't have enough to cover their balances, so they shut down. Now, savings weren't insured back then, so when the banks closed their clients lost everything.

As a result of the Great Depression, the government instituted sane financial regulations. Of course, in protecting against busts, they capped growth, so big money types hated them. Thus, neoliberals in the Reagan, Bush (I), Clinton, and Bush (II) administrations systematically removed the regulations that had been put in place to stop serious recessions from happening. There was tremendous growth, then...

This latest recession was entirely foreseeable, and in fact, my friend's grandfather called it. He said in about 2005 that the last time he had seen growth like that, and people generally acting so irresponsibly with their money was right before the Great Depression. In fact, he even called the housing market as the bubble that would pop. I promptly ignored him of course, because he was just some senile old man. Just goes to show, people will only be responsible so long as the pain of their previous irresponsibility is fresh in their minds. When it starts to fade, they get greedy and stupid again.

Re: My Favorite Chart on Earth

#27

Post by redthrowaway »

qq66 wrote: post #3

Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."

They were shorter and cheaper. They didn't involve the kind of spending that leads to trillion-dollar deficits.

Re: My Favorite Chart on Earth

#28

Post by TomOfTTB »

redthrowaway wrote: post #27
qq66 wrote: post #3

Of course Korea and First Gulf War are not here, since they would ruin the author's argument. Cue the chorus of people arguing why Korea and First Gulf are "different."

They were shorter and cheaper. They didn't involve the kind of spending that leads to trillion-dollar deficits.

Iraq is definitely a sink hole. But the War in Afghanistan has cost $370 billion which is $200 billion less than Korea (in inflation adjusted dollars).

http://costofwar.com/en/ http://historical.whatitcosts.com/facts-korean-war.htm

Re: My Favorite Chart on Earth

#29

Post by randallsquared »

TomOfTTB wrote: post #24
throw_away wrote: post #5

Earlier quoted context omitted.

I don't know if I'm the chorus you're talking about, but they were both much shorter than the ones marked (gulf war 1: 90-91, korea: 50-53). If he shaded those boxes as well to the graph, I don't see it "ruining" his argument. The growth in those four years wasn't exactly spectacular. Very slightly up at best.

The U.S. was only in WWII from 41-45. It was only in WWI from 1917-1918. Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. To give one example the initial Afghan offensive only involved about 1,300 ground troops. As of 2003 that number was still only at 10,000 ( http://www.cbsnews.com/stories/2009/12/01/ap/government/main... ) That's around the same number we had in Somalia…

Also saying "The war on terror" is kind of misleading since troop levels have varied greatly.

Only if you believe the cause is troop levels. There are lots of things about a war that could be responsible for a correlation that are not directly correlated with number of troops deployed.

Re: My Favorite Chart on Earth

#30

Post by TomOfTTB »

randallsquared wrote: post #29
TomOfTTB wrote: post #24

Earlier quoted context omitted.

The U.S. was only in WWII from 41-45. It was only in WWI from 1917-1918. Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. To give one example the initial Afghan offensive only involved about 1,300 ground troops. As of 2003 that number was still only at 10,000 ( http://www.cbsnews.com/stories/2009/12/01/ap/government/main... ) That's around the same number we had in Somalia…

Also saying "The war on terror" is kind of misleading since troop levels have varied greatly. Only if you believe the cause is troop levels. There are lots of things about a war that could be responsible for a correlation that are not directly correlated with number of troops deployed.

The author is contending that armed conflicts have an impact on the economy. I'm offering other conflicts with similar troop levels to disprove that theory. I'd be open to any other factors you think distinguishes the Afghan conflict from these other conflicts but just saying there could be other unnamed factors doesn't further the debate.
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