Weimer Republic: A Paradigm for the current US Stock Market?

Posted on October 14, 2009

As the US stock market continues to race higher, and the value of the dollar continues to plumb lower, it pays to remember that during the Weimer printing press in 1919-1922, the Weimer stock market rose over 89X, from 100 to 8900. The Weimer market seems to have actually peaked at a whopping 21,400 in 1923. Here is a good link, which has the entire history of the Weimer printing spree: http://www.nowandfutures.com/us_weimar.html

The end result of the Weimer printing press wasn’t pretty in the least bit, which makes one wonder how the largest monetary printing press ever unleashed, that of the US Federal Reserve and US Treasury since Oct. 08, will turn out. My guess, as I’ve stated in the past, is that since stock prices now have no theoritical upper limit (i.e. every big bank is now guaranteed by the Fed/Treasury, and is permitted to falsify accounting statements, rendering asset pricing valuation meaningless and putting capitalism to rest), pressure will continue to build for continued staggering price rises in financial la la land. So maybe Dow 20K is not that far off? Then Dow 40K is really just another 100% move.

Eventually, of course, the financial insanity will trickle down into the real economy, with a vengeance, pushing up prices for everything. But, a little partying until the endgame of hyperinflation arrives surely can’t hurt.

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