August 14, 2018 | Shades of Irving Fisher

Here’s a Bloomberg headline that should scare the hell out of permabulls: ‘World-Beating U.S. Stocks Show No Sign of Falling Back to the Pack’.  It’s the ‘Show No Sign’ part of this attention-grabber that seems fraught with hubris — so much so that we shouldn’t be surprised if the stock market were to begin imploding as soon as…tomorrow? Dr. Irving Fisher, an eminent professor in his day, achieved eternal notoriety with the observation, just before the 1929  crash, that the stock market had reached ‘a permanently high plateau’.  Has anything you’ve heard or read lately recalled Dr. Fisher’s kind of optimism? If so, please drop me an email so that I can share it with readers.  In the meantime, I’m going to read Fisher’s work, The Debt-Deflation Theory of Great Depressions and report back to you. It seems astounding to me that a renowned economist steeped in the theory of deflation could have failed to see what was coming. The book was written after the crash, in the throes of the Great Depression, but I have to assume that the ideas it expounds took shape in the professor’s mind before that fateful autumn of 1929. While he may have learned the lessons of history, it would appear that the rest of us are about to repeat them.

Rick Ackerman August 14th, 2018

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