Why the US will face a decade of Recession

Every 40 years we have a major recession when interest rates are low and the Government cannot keep lowering rates.

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[FortNikitaBullion]

So ... any scientific reason why it's 40 years?

[MrAlanKendall]

@FortNikitaBullion

The scientific reason that the bubble was caused the fourth decade is that the Government lowered the interest rates in the 1980's, 1990's and 2000's to stimulate the economy during recessions. This caused a housing bubble that takes a while for the population increase to absorb. In the previous cycles, the Governement also lowered rates for three decades and caused housing bubbles. When rates are low, stocks will grow, when rates are high, stocks will die.

[korictixor]

@MrAlanKendall why do they lower rates for 3 decades specifically?

[MrAlanKendall]

@korictixor

The Reagan era lowered rates to stimulate the economy tp lower the 12.5% unemployment rate and it worked. Then Bush Senior administration lowered rates to stimulate the economy after the Aerospace recession. Then the Bush Junior administration lowered rates to stimulate the economy after the dot com bubble burst to stimulate the economy. Lowering rates did stimulate Auto sales, Home sales, Comercial sales, Retail expansion and Banks causing economic growth.

[AwisemanisStrong]

Where the Spirit of the Lord is, there is Liberty. Do NOT associate with those given to CHANGE! Do NOT be afraid of sudden terror, Nor of trouble from the wicked when it comes, For the Lord will be your confidence, And will keep your foot from being caught. The wicked flee when noone pursues, but the righteous are bold as a lion - Proverbs

FEAR NOT, PRAY FOR YOUR ENEMY - Jesus

[MrAlanKendall]

@AwisemanisStrong

40 years in the Bible is a generation. This has been called the generational change, when you experience 2 decades of deflation (1980's and 1990's) followed by 2 decades of inflation (2000's and 2010's). Every 40 years we experience a major recession lasting a decade. Joseph noticed it in the Bible and predicted a 7 year winter recession. This happens every 4th decade in USA; 1890's, 1930's, 1970's and 2010's. From 1982 to 2009 rates were lowered causing the bubble.

[davewinger]

@MrAlanKendall The Federal Reserve System was created in 1913 in response to financial instability. Your graph shows the recession in 1890 and you say interest rates went up clearly before the federal reserve system was created...What interest rates? What are you talking about? Please explain because you have lost me.

[kn9ioutom]

FDR CAPITALISM WORKED ! GRAPH WENT UP

[siajiale]

This is Macroeconomics at the basics... Expert Traders do extremely high level macroeconomics... not technical analysis.

[caganb]

great advice

[ve3tru]

Yes..but this model ignores fundamental shifts in the economy.

Going off the gold standard and having fiat money.

Massive deficits created by both parties. "Reagan years was a nightmare for deficits and I liked him", a corrupt system incapable of change.

The total disregard for law ie the constitution. A new police state "homeland security" deportations and torture. This is not just another round of 7 years bad luck

[chuckbiss]

with no history exp. or check, that sounds good, could (trade) invets, but i think economy is going down a lot more this 30yrish prd, (why is interest rate, = stock prices) all relative

[korictixor]

@MrAlanKendall What about the 1890-1930 and 1930-1970 cycles? Why do they lower rates specifically for 30 years each cycle? Why didn't they lower them over 50 years or 20 years? The federal reserve funds rate can be described as largely chaotic up until the late 90s, with 5 distinguishable troughs of relatively low rates followed by higher rates,71-73 ~ 4%, 76-78 ~ 5%, 86-88 ~ 6%, 92-94 ~ 3% and 02-04 ~ 2%, only the most recent trough from 2002 to 2004 stands out as excessively low.