Interesting reading, not sure I agree but some food for thought nonetheless.


Inflation, Dow 13K and the Second Great Depression
April 26, 2007
Michael Nystrom, MBA


When I was about 9 years old, my father took my elder sister and I to see a performance by a famous magician called Blackstone. What I remember most about the show is when Blackstone, with a flourish of his cape, made an elephant appear onstage out of thin air. It was an astonishing feat, and the crowd - including me - went wild with applause. I had no idea how he did it. After the show however, as we were exiting the theater, my elder sister said, ?I didn?t see what was so great about that elephant. It just walked onto the stage and everyone started clapping.?

My sister?s revelation was just as amazing as the trick itself, which suddenly made perfect sense. Blackstone had used some kind of sleight of hand, distracting the audience over here while he got the elephant to walk on stage over there. With this simple, well-known magician?s tactic, he managed to fool just about everyone.

Yesterday, as the Dow ?smashed its all time high,? closing above 13,000 for the first time in history, I was strangely reminded of Blackstone?s performance that day some thirty years ago. The Dow?s current levitating act is the result of another well-known sleight of hand trick used by central bankers. It's called inflation. Even so, most everyone is mesmerized by the performance. Everyone seems transfixed, clapping in amazement at this spectacular feat.