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Egalitarian Mysticism |
| Section: BOOK WORLD / REVIEWS |
| Author: Alan Reynolds |
| Publication:
The World & I Online |
| Issue Date: 1/1/1988 |
| Size: 2,892 Words, 17,134 Characters |
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THE GREAT DEPRESSION OF 1990
Ravi Batra
New York: Simon & Schuster, 1987
235 pp., $17.95
Ever since the stock market crash of 1929, there have been best-selling books every few years exploiting fears of another crash. Several such books are on the market today, just as there were around 1975 and 1979. Ravi Batra's The Great Depression of 1990 is scarcely unique, but it does make the most extreme claims so far, predicting "the worst economic turmoil in history."
To the average person, stock prices seem to rise and fall for no reason, as though investors--even the skilled staffs of major financial institutions--were simply foolish. The authors of doomsday books can easily exploit the fears that come from such ignorance by arguing that stock prices have to fall simply because they went up. Yet previous peaks in stock market prices, such as December 1961 or January 1966, were usually followed by prosperity, not depression. In 1961, for example, the stock of IBM sold for eighty times its profits per share, while even at the market peak in August 1987, IBM stock was only about twenty times its earnings, and most other stocks were not even that high. Yet 1961 was hardly a year that people remember as an insane speculative binge or a prelude to disaster, even though stock prices in real terms (adjusted for inflation) were even higher in 1961 than they were at the peak of September 3, 1929. Stock prices once again tripled from the summer of 1982 to the fall of 1987, but this was not irrational. Instead, the stock market rally reflected a huge increase in actual and expected profits and production, as well as a much lower level of interest rates, tax rates, and inflation...
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...e financial system, as similar policies did in the 1930s. A beggar-thy-neighbor policy of deliberately sinking the dollar, causing inflation in the U.S. and deflation abroad, could do the same. In the absence of such obvious policy blunders, however, there is no inherent reason that both the U.S. economy and the stock market's assessment of its future should not continue to reach new heights.
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Publication Details
(The World & I Online) |
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The World & I Online is a
comprehensive academic resource that encompasses a broad range of
articles by scholars and experts in the areas of Global Studies,
Liberal Arts, Fine & Applied Arts, General Science, and Spanish.
Originally published monthly in print as The World & I, our site
includes the complete contents since 1986 and continues to publish
a new issue online each month. |
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