Jerome Tuccille

Sunni: You're currently working in financial services, right? Isn't that something of a wild ride these days?

Jerry: The world of personal finance and investments is always a wild ride. Things are pretty tame now compared with 25 years ago when the Dow Jones Industrial Average bottomed out at 777, mortgage rates were in the high teens, and the Hunts were trying to corner the silver market. Before that we had stagflation—a sluggish economy combined with high inflation. For more than a decade the Dow traded in a rut, back and forth between 750 and 1000. Things are pretty rosy now compared with then.

Sunni: What's your take on how things are looking in this country, economically speaking? It seems to me that Fed chairmen mostly make soothing sounds, and most of the mainstream media accept what they're saying, but others, most notably Bill Bonner and Richard Daughty, think things are going down the tubes.

Jerry: Pessimism sells while optimism doesn't. Back in the 1970s, Harry Browne and Doug Casey were predicting the end of the world as we know it, their books became best-sellers and they made a lot of money terrifying the investing public. After them we had Ravi Batra and others saying essentially the same thing. Guess what? They were all wrong. I wrote a book in 1978 entitled The Optimist's Guide to Making Money in the 1980s and my book probably sold one-tenth as well as those by the end-of-the-world brigade. In my forecast I said the Dow would start rising around 1982 and never look back, and that's exactly what happened. Now, incredibly, the stock market—at least the Dow—is soaring to new heights despite a disastrous war in Iraq and ongoing mayhem in the Middle East and elsewhere. Bush is the very antithesis of libertarianism, yet the economy keeps humming along and stocks keep going up.

The lesson here is that the economy continues to expand despite the best efforts of politicians to regulate it to death and spoil the party. The reason why the economy keeps expanding is the spread of capitalism and free enterprise globally. The emerging world—China, India, and other areas that were formerly socialistic and communistic—are freeing up their markets. This has unleashed a torrent of wealth creation and buying power around the world. Looking back to 1927, the S&P 500 has grown at an annual rate of about 11% and small-cap stocks have done better. This has happened in an environment of world wars, Korea, Vietnam, and now Iraq—not to mention earthquakes, tsunamis, hurricanes, and other natural disasters. It's happened despite FDR, Jimmy Carter, LBJ, Richard Nixon, and Doofus W. Bush, the circus clown in chief. Obviously, the market fluctuates from time to time. We are bound to pull back sooner or later. But I see nothing on the horizon, short of a meteor hitting planet earth and wiping us all out, to deflect the historical trajectory.