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Time Dislocation in the Financial Markets--A Centruy Ago

One bad thing about "new economies" is that it seems to distort all sense of time. Take a look at the dislocation that took place about a century ago.

Calendar Time     Economic Time
1910s                   1910s
1920s                   1940s
1930s                   1910s
1940s                   1930s
1950s                   1950s

In the 1910s (and the two preceding decades), the U.S. economy grew in line with its long-term trend. No surprise there.

In the 1920s, the "new economy" (of cars and radios), gave Americans a glimpse of the 1950s, thereby appearing to pull them into the "1940s," on the way to the "1960s."

But that was too fast a pace. We were by no means ready for the "Moon Walk" in the 1930s. Instead, we retreated two decades, to the 1910s.

Recovery began in the 1940s, but it brought us back to the 1930s, a decade or so behind trend. We finally caught up to trend in the 1950s, 20-30 years behind where we thought we would be.