Great way to explain the volatility of central banking

[niall]

The chart below is a great tool to explain to friends and family how central banking creates wild swings in the economy. You'll notice on the chart, that from 1870 to 1920, the gold price of the Dow showed relatively constant and stable growth along the trendline. In 1920, just 7 years after the creation of the Federal Reserve, you can see big peaks and valleys, with each cycle swinging more wildly than the last (higher highs and lower lows). Very illustrative of the boom/bust cycle that is a natural byproduct of centrally controlled money.

 

[nascar]

the chart is missing

 

[niall]

Sorry had technical difficulties with the chart. It's there now.

 

[tikwanleap]

wow, that's a very eye opening chart. thanks!

 

[niall]

yw!

 

[mexicanpizza]

Awesome chart, you should mark "creation of Federal Reserve" at 1913, for the uninitiated.

 

[jglapski]

The logarithmic scale on the chart underestimates the booms and busts created by central banks. It would be interesting to see with an arithmetic scale.

 

[weatherbill]

excelent chart.....now, the stocks are still high, but gold is high. I think if stocks go down this time, gold will go really really high!

 

[niall]

The logarithmic scale on the chart underestimates the booms and busts created by central banks. It would be interesting to see with an arithmetic scale.

Here's one with a linear scale. You can clearly see how the central banking system keeps pumping cheap credit into the market, driving it upward, and then it inevitably reconciles downward. Time to buy gold & silver boys!

 

[bah]

Huh, you don't buy shares of the Dow... It's a stock market index. The chart is labeled wrong.