What Market History Teaches about Private Investment Accounts

Georg Wilhelm Friedrich Hegel writes, in his Philosophy of History, that, "What experience and history teach is thisthat people and governments have never learned anything from history, or acted on principles deduced from it." Yet it is clear that history teaches many lessons.

We can learn one lesson that history teaches that is pertinent to the President's plan to open the Social Security System to private investment accounts. Such a plan can only be explained by some kind of eternal faith in the stock market and an ignorance of the market's history.

In August, 1929, John J. Raskob, Chairman of the Democratic Party, wrote, "If a man saves $15 a week, and invests in good common stocks, at the end of twenty years he will have at least $80,000 and an income from investments of around $400 a month. He will be rich."

Two months later the market crashed to begin the Great Depression, which only World War II put an end to. (4/11/2005)

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