20th Century US Economic History

1907 - Bank failures
1913 - Fed Created
1916 - US Farmers feed two continents by increasing production
1919 - WWI Ends
1921 - The US Farmers have a hard time as the recession starts
1925 - Banks start lending recklessly
1927 - Stock markets start to rally crazy
1929 - President Herbert Hoover could not help much in preventing the Great Depression
1932 - FDR comes to power and starts a series of fireside talks
1933 - Keynes tells govt. to start spending to stimulate the economy
1934 - FDR Signs a new deal and Bank holiday etc
1942 - Fed buys treasury bonds and pumps money in the system for WWII
1946 - Employment act guarantees that govt will take care of citizen jobs
1950 - Treasury and Fed at loggerheads
1951 - Fed given a more autonomous role in monetary policy
1953 - Eisenhower era with big spending
1960 - JFK to power
1962 - Minor Tax cuts
1963 - JFK Murdered
1964 - President Lyndon Johnson makes a 10 Billion tax cut
1965 - Inflation grows due to war production
1966 - Fed controls the inflation quite well
1970 - Inflation set fire due to the vietnam war
1972 - 4% inflation and then the crop failures
1973 - 8.5% inflation and now the Oil Embargo
1974 - In Aug inflation at 13% annual rate. This was due to food and oil supply shocks
1975 - Stagflation

Why Federal Reserve failed to prevent 1929 Depression

* In 1907 the bank failures start with Knickerbocker Trust Company(KTC)
* JP Morgan does not entertain to save KTC
* This starts a whole wave of bank failures threatening JP Morgan's own assets also.
* A need to have a bank for all the banks is sought by one and all
* In 1913, Federal Reserve is commissioned as a 12 member bank system
* They had certain tools to use for monetary policy like increase discount rate etc.
* In 1929, the banks start to fail again. Foreigners start leaving US with their gold
* Fed is panicky and starts raising discount rate to avoid gold outflow
* This has a spiral effect of worsening the money supply and more bank failures result
* So you could say that the Fed failed in its very first assignment
* However it gave the Fed more insight on how to prevent such runs later.
* May be the Bear Stearns bank failure in 2008 was prevented from becoming a 1929 kind of disaster by the Fed. Who knows?

Words of wisdom

These are some of the things we tell our clients.

1. Start saving before investing. At least 8% of your income should be left alone.
2. If you want moderate returns with less headache, simply buy no-load index funds.
3. Invest long-term: Market-timing is like gambling particularly if you don't follow the markets.
4. Get a job that you love to do and you will be happy.
5. Cut your losses early so you can count your gains instead of your losses.

Top of the Class

Can you point out the similarities in the people below?

Ray Ozzie, Microsoft chief software architect
John Chambers, Cisco CEO
Steve Jobs, Apple CEO
Bill Gates, Microsoft chairman
Barry West, Sprint CTO
Carly Fiorina, former HP CEO
Larry Ellison, Oracle CEO
Paul Otellini, Intel CEO
Marc Benioff, Salesforce.com CEO
Padmasree Warrior, Cisco CTO
Arun Sarin (Vodaphone)

Now what about these?

Jonathan Schwartz (Sun Microsystems)
Matt Szulik (Red Hat)
Sam Palmisano (IBM)
Mark Hurd (Hewlett-Packard)
Michael Dell (Dell)
Linus Torvalds (Linux founder)
Hector Ruiz (AMD)
Eric Schmidt (Google)

Top 50 most competitive nations of the world

USA leads the charts for many years now.


Source : WEF