Market Bubbles, Revolutions & Wars
England 1720
In 1720, Sir Isaac Newton decided to sell his stocks .. Newton had been an investor in the south sea company, a famous enterprise which effectively commanded a trading monopoly with South America .. the investment had already made Newton a lot of money, he was up more than 100% in a very short time
in fact, investors were clamoring to buy up the south sea company’s stock, and the share price kept climbing and climbing .. Newton sensed that the market was getting overheated, it no longer made sense to him .. so he sold .. there was only one problem: the share price of the south sea company kept climbing .. all of Newton’s friends were getting rich; so, against his better judgement, Newton went back in, repurchasing shares at more than three times the price of his original stake .. the market then collapsed, and he lost virtually all his life savings .. the experience is said to have given rise to his bemused response:
“I can calculate the movement of stars, but not the madness of men” ~ Sir Isaac Newton
& i would tell him, Sir ji, please leave a few things for tiny souls like me to figure out …!!!
French revolution (1789)
before United States and Great Britain, France was the dominant superpower in the world … they had it all – overseas colonies, an enormous military, social welfare programs like public hospitals and beautiful monuments; most of it was financed by debt … France, like most superpowers before and after, felt “entitled” to overspend as much as they wanted … and their debts started to grow and grow …
by the eve of the French revolution in 1788, the national debt of France was so large that the government had to spend 50% of tax revenue just to pay interest to its lenders … yet despite being in such dire financial straits, the French government was still not able to cut spending .. all of France’s generous social welfare programs, plus its expansive military were all considered untouchable – using a stupid concept called “last year’s budget” so the spending continued & people become accustomed to the stuff called “entitlements” not realizing that it is paid by the debt .. in 1788, the French government overspent its tax revenue by 20%, increasing the debt even more; unsurprisingly revolution came the very next year.
How US stock market helped Hitler to come to power (1928-1930) & WWII (1939-1945) ?
in the aftermath of WWI, US and allies chocked Germany with so much war expenses that life was horrible in Germany, it suffered from hyper inflation, leading to the birth of Nazi party … however, the poverty days of early 1920s turned into good times in late 1920s, as it was all financed by US companies, so much that people in Germany wouldn’t listen to Hitler, and therefore, his party lost the 1928 elections … & then came the stock market crash of October 1929 … the US companies and individuals lost so much that they had to recall those loans resulting in sudden disappearance of funds world-wide … causing the ruling party in Germany to lose the 1930 elections and bringing Hitler to power … in early 1903s, Hitler was only focused on Germany’s success and had no plans for world domination … then came the recession of 1937, which brought life of Germans back to what he had seen in early 1920s, and my guess is that he had no knowledge of cause & effect or other economics principles; so, he set his mind for world domination which resulted in WWII.
WWII brought freedom to India (Aug 1947)
Gandhi and his cohorts in Indian National Congress are credited to bring freedom to India from British rule … i say, “utterly butterly nonsense,” … after the end WWII, Britain had so many of its own problems that they didn’t see any economic benefit of holding its rule in India, so the country was given up like cutting a tree … even though allied forces win the war, economically Britain lost it completely and USA took the Super Power crown.
separately, history tells us that Britain was ready to free India around 1933, but its the Indian leadership who delayed accepting due to the fact that they were not ready or experienced to rule such a vast country … plus they had to create all this drama that they are responsible for bringing freedom to India .. Gandhi supported Britain in WWII, as India sent her troops to fight with Britain … & Gandhi gets all the credit to bring freedom to India .. really ?
United States (Oct 2017)
as we finished FY 2017, the country debt just surpassed $20T against a GDP of $17.0T; we added another $0.443T in deficit over $3.2T revenue … with an avg. rates of 2.284%, about $0.457T is paid as interest … 36% of the budget was spent on welfare, 28% on health care, 15% on national defense & 7% on net interest – total of 86%; rest 14% was spent on creative things