{"id":23575,"date":"2011-09-01T20:55:33","date_gmt":"2011-09-02T00:55:33","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=23575"},"modified":"2011-09-01T20:55:33","modified_gmt":"2011-09-02T00:55:33","slug":"those-steely-eyes-of-j-p-morgan-could-they-help-us-today","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/09\/01\/those-steely-eyes-of-j-p-morgan-could-they-help-us-today\/","title":{"rendered":"Those Steely-Eyes of J.P. Morgan: Could They Help Us Today?"},"content":{"rendered":"

“The Panic of 1907” vs. the “Debt Crisis” of 2011 <\/span>
\n<\/span><\/h3>\n

By Elliott Wave International<\/span><\/h3>\n

If “legendary Wall Street figure” ever described anyone, it was turn-of-the-last-century financier J.P. Morgan. You can throw in “bigger than life” to boot.<\/p>\n

Morgan was used to getting his way. His steely eyes cast a “ferocious glare.” His bulbous nose added to his imposing presence.<\/p>\n

Beyond appearance and persona, Morgan was a one-man central bank. Historians credit him with bringing calm — and loads of liquidity — to the “Panic of 1907.”<\/p>\n

While he “stared down” that<\/em> financial crisis, even J.P. Morgan would be no match for today’s<\/em> national debt. In 1907, the Wall Street legend gathered New York City’s biggest bankers into his office and demanded that they had 10 minutes to collectively pledge $25 million to keep the NYSE open. Morgan got his way.<\/p>\n

At the time that was a lot of money. But let’s see how far an equivalent sum (constant dollars) would go today.<\/p>\n

I used several methods to calculate constant dollars from 1907, and the highest estimate (relative share of GDP) converts $25 million then to some $11 billion today.<\/p>\n

Yet $11 billion doesn’t even make a dent in our $16 trillion national debt.<\/p>\n

Interestingly, the 1907 Panic eventually led to the 1913 creation of the U.S. Federal Reserve. Then as now, the central bank’s function is “financial stability.”<\/p>\n

Specifically, the Federal Reserve serves as a “lender of a last resort” — the role Morgan and his banker friends played in 1907.<\/p>\n

Fast-forward ninety years: In 2002, Robert Prechter published Conquer the Crash<\/em> (now in its second edition), and said this about the central bank:<\/p>\n

“Congress authorized the Fed not only to create money for the government but also to ‘smooth out’ the economy by manipulating credit (which also happens to be a re-election tool for incumbents). Politics being what they are, this manipulation has been almost exclusively in the direction of making credit easy to obtain.”<\/em><\/p><\/blockquote>\n

Sounds a lot like today, doesn’t it?<\/p>\n

And just a few weeks ago, Fed Chairman Ben Bernanke said he wants to keep interest rates very low:<\/p>\n

“Issuing a grim new assessment of the American economy, a divided Federal Reserve said it now expects to hold short-term interest rates near zero for at least two more years.”<\/em><\/p><\/blockquote>\n

Los Angeles Times<\/em>, (8\/10)<\/p>\n

Since the start of the Great Recession, the Fed’s easy money policy has not restored health to the economy. Why should the same policy work in the next two years?<\/p>\n

Notice how the above quote uses the phrase “a divided Federal Reserve.” With that in mind, here’s what Prechter published as recently as July 16:<\/p>\n

“…when the trend in social mood turns down again, dissension will increase. The Fed is fracturing internally…”<\/em><\/p><\/blockquote>\n

Elliott Wave Theorist<\/em>, July 2011<\/p>\n

The U.S. Federal Reserve was created almost a century ago. Has it kept us financially stable? What does the future look like for America’s central bank?<\/p>\n

 <\/p>\n\n\n\n
\"\"Get your Free Report<\/strong> titled Understanding the Fed<\/em><\/strong>, and learn more about America’s “lender of last resort.”This complimentary<\/em> report goes way beyond the history of the U.S. Federal Reserve, and shines a bright spotlight on the central bank’s machinations today<\/em>. Most importantly, your free<\/strong> eBook helps prepare you and your family for the “economy of tomorrow.” We see big changes just ahead.<\/strong><\/p>\n

Gain instant access to Understanding the Fed<\/em><\/strong> by simply joining Club EWI — a membership community of over 300,000 of the independently-minded. Membership is also free. Simply follow this link for your quick and easy sign-up>><\/strong><\/a><\/p>\n

 <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

This article was syndicated by Elliott Wave International and was originally published under the headline Those Steely-Eyes of J.P. Morgan: Could They Help Us Today?<\/strong><\/a>. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

“The Panic of 1907” vs. the “Debt Crisis” of 2011 By Elliott Wave International If “legendary Wall Street figure” ever described anyone, it was turn-of-the-last-century financier J.P. Morgan. You can throw in “bigger than life” to boot. Morgan was used to getting his way. His steely eyes cast a “ferocious glare.” His bulbous nose added … <\/p>\n

Continue reading “Those Steely-Eyes of J.P. Morgan: Could They Help Us Today?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-23575","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=23575"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/23575\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=23575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=23575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=23575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}