DOW Jones Index (DOW) is not constant. Comapanies creating this index must be prominant on their business sectors and also widely held. As soon as they lose this qualification they will be replaced. Even with this impediment this index is the best indicator of the business climate in the USA and to some extent also in the world.
About 70% of the GDP is money that the people receive as salaries and wages. With this it is clear that GDP and the DOW must follow the similar path. Whenever they separate is the safest bet on the planet that they are boud to find each others within a few years again, see the two top graphs below .
The Stock market reaches back for over 200 years. This system as a whole is extremely useful for creating capital for all new and existing enterprises. It can also be used by the owners of successful enterprises to cash in and move on to other activities as they please. Bill Gates chose filantrophy as his new challenge after Microsoft. Selling a working well established enterprise remains the fastet way to generate capital. Unfortunately creating a successful enterprise remains elusive to most people. Gettting the first enterprise running will take much longer than ever imagined and perhaps it requies many false starts and at the end they may even drain all the finacial resources of the hopeful entrepreneur.
For most people this type of activity is not the best way to gain retirement income. Of course there are exceptions who will strike gold, and plenty of it, compare Bill Gates, Steve Jobs, Warren Buffet, etc...
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The first consclusion from the above is that the criminal side of market manipulation is much smaller today than it was in 1920's. The criminals in 1920's were lucky that our granparents did not have internet for dissimination of the facts what was done. Had the knowledge been on the streets the criminals from the Wall Street would have been hanged to the nearest lamp posts whenever encountered.
GDP numbers have been recorded only since the early 1900. Enough to make a comparison between the 1929 crash and the 2008-9 market meltdown that we are still tryiong to comprehend. This time the GDPhas not dropped 50% from the peak. This happened four years later in 1933. Today we are still totally unaware of the hard times of our grandparents.
What we have now is market volatility (spread between market high and low, thin black lines in the graphs) that is approaching the levels that existed in 1920's. This can be dagerous as most people can not cope with this kind of volatility.
These variations are actually not random movements as it appears but deliberate market manipulations used to take the money from all those who do not understand what is going on and had invested in margin or just had too weak nerves. Both of them are wiped out with huge losses and can never recover what they lost.
Today only 1% of the US population owns 95% of all assets in the country and if nothing is done they will get richer by the day as there is no more mechanism that can stop this change. We show it later how it works.
Our granparents were smarter and fixed the problems of the stock and other markets by installing various margin regulations and rules that prevented the rich from using their shear financial power from driving markets up and down without putting any of their own own money at risk.
These rules worked well until 1990's but then two presidents, Mr. Clinton and Mr. W Bush both started yielding to demads and bogus studies of the wealthy and well connected and started silently dismantling the safety net that was created in the aftermath of the great deprtession. In 2007 the last of the impedim,ents were removed and we can see that the volatility returned to the markets.
If our Governmment does not take this seriously it is not sure at all that we can recover from where we are today.
The criminal elements among the 1% of the population have also a back-up plan in global derivatives markets. Enron was here the exercise case and it worked well. The lest guilty were put to jail and the real criminals diappeared. This game has grown to US$ 600 T(T)rillion level from almost nothing in less than 10 years. We must defuse this game through globally coordinated legislation. The wager here is about US$20 Trillion at any given moment. A huge sum when copatred to the GDP of the at US$ 14 Trillion. This game can not be dismatled easily as the real capital is behind it - capital that can buy all politicians on the way if they choose to do so!
Its works the same way how Israel is forcing the US Congress to follow it's demands in the Middle East. Only here the power is immensely larger that what Israel can ever master.