Greenspan is the man with the plan: He Knows the History.10 Worst Dow Down Days
Of the Top 10 Worst days in the Dow, two occur before 1913;
, six occur during the Great Crash & Depression;
, two occur in 1987.
Date %Decl. Point Decl. Closing Price
1 10/19/1987 22.61 -508.00 1738.74
2 10/28/1929 12.82 -38.33 260.64
3 10/29/1929 11.73 -30.57 230.07
4 11/6/1929 9.92 -25.55 232.13
5 12/18/1899 8.72 -5.57 58.27
6 8/12/1932 8.40 -5.79 63.11
7 3/14/1907 8.29 -6.89 76.23
8 10/26/1987 8.04 -156.83 1793.93
9 7/21/1933 7.84 -7.55 88.71
10 10/18/1937 7.75 -10.57 125.73
Of the stocks included in the Dow at the time of the 1929 crash, only two remain components today: General Electric (nyse: GE - news - people ) and General Motors (nyse: GM - news - people ).
In his mind, the ends justify the means.
In his mind, he is ennobled and emboldened, by his bare-fisted wrestling with Destiny, his, ours, our country’s, and the World’s.
He pumps at 6%.(refer to the Anals).
What if I defined inflation or deflation as the difference between the GDP growth rate and the growth in The Feed? That the Neutral Stance was a Feed = GDP growth? If we said that the “benign” Inflation rate was 2.5% and that the GDP growth actually was 3.5% then we could comprehend how a Feed of 6% would be considered the “responsible” action of a Central Banker.
I see tonight that that is indeed what AG believes. He has a plan, a projection, and he has the courage, he calls it, to stand by that plan. He also has the courage to pump more, up to 16%, or even more in crises. He believes he has the forbearance to pump less than 6% when that is right.
This is a highly tuned calculation, which we ridicule as hedonics, which sounds like – because it is – a term describing the tortured English employed by AG to mask his intentions to hold to this diabolically simple plan. Blinded by this hubris, he does not recognize that in fact, right now, Inflation is at least 3.5% and the True GDP is no more than 2.5%.
Once the integrity of such a calculation is broken, the GIGO principle, caused by the exaggerated GDP, inflation will escalate geometrically, exponentially, irreparably.