What type of economic situation would cause stocks, long term treasuries and gold all to go down and stay down at the same time? Has it ever happened?
What about all 4 going down? In addition to the above, cash also suffers from inflation?
What would cause all PP assets to go down?
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Sam Brazil
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goodasgold
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Re: What would cause all PP assets to go down?
In 1981 Paul Volcker, head of the Fed, was determined to drive inflation out of the U.S. economy, so he instituted a *huge* interest rate hike which temporarily devastated stocks, bonds and gold. This is the classic "tight money recession" which St. Harry warned us about when setting up the 4X25 PP. During that mega-recession, cash was the only asset that saved your bacon.
So it is unlikely that all 4 assets would go down at the same time, barring some "super black swan event" such as a giant asteroid wiping out the planet we call home.
P.S. If only we had another Fed chief like Volcker with the intestinal fortitude to tell the truth and to take action accordingly.
So it is unlikely that all 4 assets would go down at the same time, barring some "super black swan event" such as a giant asteroid wiping out the planet we call home.
P.S. If only we had another Fed chief like Volcker with the intestinal fortitude to tell the truth and to take action accordingly.
Last edited by goodasgold on Fri Aug 08, 2014 2:47 pm, edited 1 time in total.
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Ad Orientem
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Re: What would cause all PP assets to go down?
Trumpism is not a philosophy or a movement. It's a cult.
Re: What would cause all PP assets to go down?
Sam,
In goodasgold's example from 1981 it's important to remember that a PP allocation came roaring back in 1982 (up over 20% in nominal terms). Also, the numbers I have seen LTT's actually showed a slight nominal rise for 1981 though I don't remember how hard they initially got hit by the FED's actions.
In goodasgold's example from 1981 it's important to remember that a PP allocation came roaring back in 1982 (up over 20% in nominal terms). Also, the numbers I have seen LTT's actually showed a slight nominal rise for 1981 though I don't remember how hard they initially got hit by the FED's actions.