Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity - Eric Janszen

[bart]

Re: Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity - Eric Janszen

Bart:

I have a query about month-to-month graphical comparisons of various downturns. Is a "month" today equivalent to a "month" in 1992 or 1980 or 1929? Because of the rise of computers, inventory control takes place at a faster rate now. Also, the housing market can clear faster now because of computer-aided housing searches. So would the graphs of the current downturn have to be stretched to make a better comparison with the older data?

Hot damn... interesting question, it even caused a little smoke to come out of my ears as the brain had to be engaged - and on a Monday. ;)

Overall, I don't have any real problem with someone extending or compressing the stats if they think it would help but for me I don't see much advantage. People are pretty much the same and respond similarly now, and most "basics" are similar (as in fear, greed, other sentiment measures, and "total" money supply) - and in my opinion that's a much bigger factor than inventory adjustment speed or computer aided housing searches.

There's also much faster & stronger response from the Fed now as compared to then, and monetary lags are quite similar over time too.

You might get something out of my first attempt ( http://www.nowandfutures.com/great_depression_old.html ) to do comparisons between then & now since many of the charts show the entire period of the '30s - although they're not as clean or easy to understand as my more current work ( The Great Depression tight parallels... busted (v 2.0) - the text is out of date but the charts are as current as possible).

Lastly, there's always:
"History doesn't repeat itself, but it does rhyme."
-- Mark Twain

[FRED]

Re: Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity - Eric Janszen

Hot damn... interesting question, it even caused a little smoke to come out of my ears as the brain had to be engaged - and on a Monday. ;)

Overall, I don't have any real problem with someone extending or compressing the stats if they think it would help but for me I don't see much advantage. People are pretty much the same and respond similarly now, and most "basics" are similar (as in fear, greed, other sentiment measures, and "total" money supply) - and in my opinion that's a much bigger factor than inventory adjustment speed or computer aided housing searches.

There's also much faster & stronger response from the Fed now as compared to then, and monetary lags are quite similar over time too.

You might get something out of my first attempt ( http://www.nowandfutures.com/great_depression_old.html ) to do comparisons between then & now since many of the charts show the entire period of the '30s - although they're not as clean or easy to understand as my more current work ( The Great Depression tight parallels... busted (v 2.0) - the text is out of date but the charts are as current as possible).

Lastly, there's always:
"History doesn't repeat itself, but it does rhyme."
-- Mark Twain

Our issue with now versus then is that in those days capital flows were not terribly relevant to inflation but today they are all that matter.

[linnj]

Re: Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity - Eric Janszen

Bart:

Your mention of the "basics" led me to think of this analogy: automobiles have had many changes since 1929 to now, but their speeds are still pretty much the same. The "basic" limit on automobiles is not their inherent speed but the quality of the road system.

Information storage, transmission, and retrieval have had tremendous increases in speed, but the transport of goods (and energy) are constrained by their infrastructures*. So if we were to make comparision of market changes then and now, we would have the least mismatch if we were to focus on transportation and energy issues.

*Another "basic" constraint faced by transportation may be its degree of regulation.

[bart]

Re: Does USA 2009 = Argentina 2001? Part I: Falling economy reaches terminal velocity - Eric Janszen

Our issue with now versus then is that in those days capital flows were not terribly relevant to inflation but today they are all that matter.

Mostly true, although the trade balance and gov't debt and USDX are three of the stats and do tell part a significant part of the story.

Those charts are also US only so inevitably only tell part of the full story, albeit enough to show that now is very far from a repeat of then - which is and was my primary point, as noted in the title of that thread.

Bart:

Your mention of the "basics" led me to think of this analogy: automobiles have had many changes since 1929 to now, but their speeds are still pretty much the same. The "basic" limit on automobiles is not their inherent speed but the quality of the road system.

Information storage, transmission, and retrieval have had tremendous increases in speed, but the transport of goods (and energy) are constrained by their infrastructures*. So if we were to make comparision of market changes then and now, we would have the least mismatch if we were to focus on transportation and energy issues.

*Another "basic" constraint faced by transportation may be its degree of regulation.

Yep, we're basically tracking.