Dow Jones

April 5, 1999

Now that the Dow Jones Industrial Average seems to have permanently crossed the 10,000 barrier, I thought it might be good to analyze why the stock market has been in a boom for so long. After all, a boom like we have experienced since the mid-1980s didn't even seem possible in the 1970s and early 1980s.

Let's go back to 1973. That was the year abortion was legalized and it was a time when President Richard Nixon did just about everything he could to ruin the economy. He delinked the dollar from gold, he imposed wage and price controls, and set off inflation that engulfed President Jimmy Carter. By 1980, the country was ready to elect the former governor of California (the nation's most entrepreneurial state).

President Ronald Reagan wanted to get government "off the backs of the American people" and the economy. He wanted to cut taxes and cut government. He was able to lower marginal tax rates. And even though he didn't cut the size of government, he was able to pass bills for deregulation. That was enough.

The stock market took off and rose steadily from 1983 to today. It has been able to weather the crash of 1987 as well as the last recession. The lastest spurt followed the election of the Republican Congress in 1994 and the changed leadership of the Democratic Administration.

An editorial in the Wall Street Journal also points out that these economic changes came at a good time for revolutions in biology and electronics. These revolutions "were looking mainly for one missing element--capital. Had this been Europe, the whole biotech/digital enterprise would have been stillborn. Instead, our financial markets provided them the capital they needed."

Steady growth and capital for the biotech and computer revolutions. Not a bad record for more than fifteen years. Let's not forget why it happened.

I'm Kerby Anderson of Probe Ministries, and that's my opinion.