Thursday, November 18, 2010

Impact of Paper Currency on Equity Market, Income Inequality, Marriage rate, Divorce rate, Health....

By now I believe regular readers of our blog know that we have a Big time problem with "Paper currency system" that started on 15th Aug 1971.(Recently, writing in the Financial Times, World Bank President Robert Zoellick called for a new monetary system to replace the floating rates adopted in 1971 known as Bretton Woods II.). So there is a thought process coming in mainstream that agree on flaws of paper currency.  

In this article I have tried to see "Before 70s" vs " After 70s" pattern for many aspects. Although I don't like to use maths and stats in sensitive issues such as Marriage rate, Divorce Rate or even on Health, few graphs below were too shocking for me. So I just thought of sharing with our friends.

Historic Dow Jones Before and after Paper currency

As we all know Dow Jones Industrial Index is one of the TOP Indicator of equity health of US and in turn whole world, We can clearly see "Before 70s" vs " After 70s" pattern here.

widening income Inequality 

This is pretty interesting one. (Income inequality has Increased in Paper currencies ). There is "Before 70s" vs " After 70s" pattern here. What might be reason ? Is that the previous Graph ? are people investing in Stocks (By understanding / not understanding magic of paper currencies) becoming richer? Leaving rest all poor in comparison?  Is equity Investment only best way to make money in paper currencies?

Median Annual Earnings over decades.

Here there is co-relation for Men's income. It remains in same bracket while women's income growing steadily. This should make us proud as a human race that women's are bridging the gap of income. Although  for Woman's graph increasing trend is from mid 50s and has gone up steadily so there seems no pre 70 and post 70s correlation.
Divorce Rate over decades.

This was a simply shock to me. Here I see correlation to Before 70s and After 70s . What has changed? There was a discussion within friends on this. One said "Now a days males are having more bad habits like Smoking, over Drinking, etc... That is causing all this" Another friend who suggested that "May be women's have better income now (Previous Graph) which "helps" them to take a call if they are not happy in their married life. In old days even if women was not happy she had no option but to stick with husband as she had no economic freedom so in fact it's good development due to economy". Another more conservative friend had strong argument on that comment. He said, "Look no one divorce for pleasure. But if what you are saying is correct, then after 1st divorce, their life should be better off. In reality study shows that in US, Divorce rate for 1st Marriage is 50%, for 2nd Marriage it's 68% while for 3rd marriage it's 78%. Which means that something is wrong in thinking that capacity to take divorce is "helping" factor for happy life!!!."

I had no counter argument on that ... But what worries me is are we going in right direction as a society.

Decreasing Marriage Rate.

I see a correlation here Well. There is impact on Marriage rare as well. What may be the reason ? Need to think more ... ?

Health Data from official Web Site

What to say here .. Is easy money and credit bubble making us fat also ? at least graph shows it.

Now to counter all these arguments someone may say that these social issues have nothing to do with paper currency etc..Don't blame all our problems in paper currency...  it's a new era and this is bound to happen..... To me it makes a lot of sense in believing that all this has some co-relation with each other and is connected. But I think this is a topic of debate and I welcome comments and arguments here.

P.S:  To add the data I have taken is of 50 Years + ( Thanks to Prof Reeve Vanneman at University of Maryland for her great work on .. ).


  1. It would be interesting to see country specific results!!!

    Mihir Gangal

  2. Amaresh Ashok GangalNovember 19, 2010 at 8:15 AM

    Thanks Mihir .. Yes I can try for this .. but this is where US is US!! .. they have data well maintained and articulated !!


  3. Very nice post. Definately warrents further investigation.

  4. Amaresh Ashok GangalNovember 23, 2010 at 12:14 AM

    Thank you So Much !! I am honored to see my blog listed there.


  5. Amaresh Ashok GangalDecember 25, 2010 at 1:26 AM

    Thanks for your comment Govind . Yes even with Hard Currency system probably We won't go to Social Fabric that we had in Pre 70s :) But I think it will still be a stable system than what we have today.