As we enter the holiday season, a critical moment in the financial world is on the horizon. The stock market, particularly the DOW, seems poised to reach a historic milestone. Yet, alongside this anticipated achievement, a stark reality lurks in the form of the burgeoning U.S. National Debt. Let’s explore the significance of these two figures as they approach notable thresholds.
Currently, the DOW is making headlines—not for its performance but for its struggle to cross the symbolic barrier of 20,000. After nearly eight years of a bullish trend, this round number is ripe for a celebration. One might think that such milestones would enhance our collective wealth and prosperity. However, this is not necessarily the case.
On the flip side, we are inching closer to another significant figure: the U.S. National Debt, which currently stands at $19.9 trillion. It is soon expected to surpass the ominous $20 trillion mark.
In truth, the national debt has been far exceeding $20 trillion for some time when considering unfunded liabilities, which include obligations like Social Security and Medicare. These liabilities total more than $104.5 trillion, bringing the overall debt figure, when combined with the national debt, to a staggering $124.4 trillion. Such a large number can be difficult to fathom, making our discussion today focus on the DOW reaching 20,000 and the national debt hitting $20 trillion.
An Exercise in Numerology
The relationship between the DOW and the national debt remains elusive. Despite the complexities, we sense that both milestones may represent a larger narrative of transformation within the economy.
Is the DOW reaching 20,000 merely a coincidence with the national debt exceeding $20 trillion? Or could there be an underlying connection? In exploring this, one must balance measurable statistics with a touch of imagination.
Looking back in time, we find interesting parallels. For instance, in the fall of 1982, the DOW crossed the 1,000 mark for the last time without declining afterward, coinciding with the U.S. National Debt first breaching the $1 trillion threshold.
Since then, the national debt has ballooned steadily from $1 trillion to $20 trillion, demonstrating an exponential growth pattern, particularly sharp after the 2008 financial crisis. In contrast, the DOW’s ascent to 20,000 has been more erratic, marked by significant market corrections along the way.
Wreck the Halls
A statistician might analyze the relationship between these financial milestones and determine that there is little to no correlation. They may even create scatter plots to prove their point.
On the other hand, a numerologist may discern a deeper meaning in these benchmark figures, suggesting they could foretell future trends. Who holds the truth in this matter?
One clear observation on the path from DOW 1,000 to DOW 20,000 and from a U.S. National Debt of $1 trillion to $20 trillion is that moments of significant disparity have frequently emerged. For example, in March 2009, while the DOW plummeted to roughly 6,700, the national debt had already crossed the $10 trillion mark. Are we on the verge of witnessing another such divergence?
Drawing from a mix of speculation, numerology, and basic statistics, it seems plausible that we may be headed toward a period where the U.S. National Debt continues its rapid escalation while the DOW may very well plunge by 8,000 points or more, potentially dipping below the 12,000 mark.
Take this insight as you wish, but remember it’s the festive season. Now is the time for joy, merriment, and celebration, rather than for dampening spirits with negative thoughts about the economy.
So, indulge in the holiday spirit! Enjoy another serving of eggnog or some festive treats, and even share your generosity with those in need, before any potential policy changes make it harder to do so.
Whatever you choose to do, always approach it with caution and enjoyment in mind. In brief, consider selling bonds over the holidays.
Wishing everyone a Merry Christmas!
Sincerely,
MN Gordon
for Economic Prism
