Many are calling the recent market activity similar to the great depression of the 1930s.
And clearly there are some comparisons.
But what did not exist in the 1930s was this level of QE.
During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities.
Now that the Fed has bought up debt to an unprecedented level and the government is spending trillions on stimulus, depression is not out of the question.
I show you (and I believe this is completely original and unique content) that there is a better comparison though, to the mid ’70s.
In the chart of the you can see the depression, which hit a nadir in 1932 then came roaring back.
From 1954 (when the pre-depression highs were taken out) until 1970 the market enjoyed a huge run from 200 to 1000 in the DJIA.
Then, the first crisis hit with the Yom Kippur war.
Then came the oil embargo when OPEC formed and tripled prices.
Gas lines and oil prices…