It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
Andrew Mickey: Still though, the market continues to rally. It’s up 50% from the lows and everyone – from politicians to Main Street - is watching the market very closely.
Do you see a potential impact of a strong stock market rally and the fact about 70% of Americans hold stocks and mutual funds now and in the 30’s it was closer to 3%?
Robert Murphy: It’s certainly true that more people are involved in the stock market now, whether directly trading or because of the exposure they have in mutual funds and things like that.
So I think more Americans now are directly exposed to the stock market than was the case in the '30s.
Andrew Mickey: Do you see this as helpful or could it make the situation even worse, or just as bad, as the Great Depression?
lf it were a 1931 kind of situation where all looks well, there are plenty of “green shoots,” and rising unemployment, then it would be a great time to get out of stocks pretty soon…
Robert Murphy: Well, it's true that if you look at the stock market level as it crashed in October of ’29. That was the great crash. The market fell something like 12% and 13% back to back. So that's when everyone was panicking, people were literally jumping out of windows.
The early 1930’s was also the time Hoover called the big business leaders and told them not to cut wage rates. Initially, that's what I think was the cause of unemployment going up so high. It’s the fact that the businesses wouldn’t let the wages adjust to the market level.
In any event, in the early 1930s the stock market did recover a lot of the lost ground. People at the time said, okay, we got through the storm and everything is behind us, and the ‘20s are now going to continue into 1930s.
And so they were lulled into a false sense of security…the calm before the storm, if you will. There were a few points during the 1930s when they finally thought they had hit rock bottom, and yet, they had no idea that the worst was still in front of them.
So I do think that the position we are in right now, people talking about green shoots and so on, and that maybe the economy has finally hit rock bottom, I don’t think it has. I think that three years from now people are still going to be saying, when are we going to get out of this thing?