9/12/18

Financial Knowledge Quiz


Here is a quiz of your financial knowledge. The task is to recall the peak price (not including dividends) and date of some of the most important financial assets and indices. 

today 9/12/18all time highdate of all -time high
US Stocks - Dow Jones Industrials25,999
Non-US Stocks (EFA)$66.18
Emerging Market Stocks (EEM)$41.44
US Long-Term Treasuries (TLT)$118.94
Gold (per oz.)$1,207
Bitcoin$6,297
Oil (WTI)$69.25

Answer before looking below.


Background: a decade of super loose money

The US government allowed Lehman Brothers to file for bankruptcy on September 15, 2008. Since the Lehman bankruptcy, the world's central banks have pursued super loose monetary policy including negative interest rates, and over $10 Trillion of quantitative easing.

Ben Bernanke printed trillons

Perhaps the most often cited fear of loose money is creating too much inflation in the form of rapidly rising prices.

Many people feared loose money would create inflation

The completed table below paints a different picture. Commodities such as oil, gold and copper are far from their all-time highs. So loose money did not create commodity inflation.

2008: Goldman Sachs predicts $200 oil

What about stocks? US stocks are at, or very near, all-time highs. Many people argue that loose money has led to inflation in asset prices. However, stocks outside the US never made new highs, stock markets outside the US are about 25% below their 2007 peaks.

Cryptocurrenciwa have had the most severe declines. Bitcoin has lost almost 70% of its value in under a year, and many other 'coins' have lost more than 90%. Long-term US Treasury bonds have lost more than 15% of their value.


One World, Two messages.

Strong US equity markets suggest that we are in a growing, positive economy. The vast majority of other important financial indicators, however, suggest that we are more than ten years into a deflationary decline.


today 9/12/18all time highdate of all -time high% off high
US Stocks - Dow Jones Industrials25,99926,616Jan 26, 20182.32%
Non-US Stocks (EFA)$66.18$86.60Oct 31, 200723.58%
Emerging Market Stocks (EEM)$41.44$55.83Oct 31, 200725.77%
US Long-Term Treasuries (TLT)$118.94$143.62July 8, 201617.18%
Gold (per oz.)$1,207$1,905Sept 5, 201136.64%
Bitcoin$6,297$19,783Jan 15, 201868.17%
Oil (WTI)$69.25$145.66July 11, 200852.46%



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