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Investing and The Past

Investing and The Past

phineasupham
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Investing and The Past

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  1. Investing and the Past By Phineas Upham

  2. The Economic Slowdown • Why is it happening? • Growth path of the U.S. slowing down since 1980 • Different than after the Great Depression • In 1943, economy grew at fastest rate for any advanced nation in history

  3. Analogies in History • Good investors draw on similar situations in history • Ben Bernanke • knowledge of the Great Depression to guide US through crisis • implies analogy between Great Depression and this crisis • How might we use history to understand the present? • Three quotes: • Those who forget the past are doomed to repeat it • Those who live in the past can never move forward • History doesn't repeat itself but it rhymes • Choosing analogies, understanding the differences

  4. Possible Useful Analogies • 1999 technology bubble? • Legacy of progress in telecommunications and the internet • Oil Crisis that led to 1982 crisis? • Unhealthy nominal inflation rates • Volker’s right response • Is US like Japan in the 1980s? • Transformed into exporter to U.S. • The Great Depression? • More like China today

  5. Two Books on the Matter • Francis Fukuyama's The End the History and the Last Man • Samuel Huntington's The Clash of Civilizations • Simplifying the arguments: • Fukuyama: • political development of the world was over, democracy soon to be global rule • democracies are stable and don't evolve • the world will soon reach a democratic equilibrium. • Huntington: • A global struggle for power emerging due to globalization. • Islam, Asia, and the West in a life and death struggle for supremacy • Both: a paradigm shift unlike the past • analogies are rather pointless • Which is right? • Are we in a new age of history? • It is important to know.

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