The 1987 Crash by Martin Armstrong
The 1987 Crash took place because of the formation of G-5 (Group of 5) in 1985 that was organized to force the dollar down, no different than Roosevelt accomplished with his 1934 confiscation of gold and the devaluation of the dollar. The problem was, those in charge had no practical experience. They knew not the repercussions within the global economy. The Japanese had been buying nearly 40% of new debt offerings and they were heavily invested in US real estate. Once the politicians stated they were banning together to force the dollar down by 40%, they failed to realize the complex nature of the economy. They assumed that lowering the dollar value by 40% would allow the US to export more by devaluing the costs of its production. However, that also meant that those who had purchased US debt would lose 40% as did those who purchased US real estate and stocks. Thus, the stock market crashed. People called the brokers asked why people were selling, and they could not articulate why when there had been no domestic change in fundamentals. It was the lack of fundamental news that caused the panic!
The 1987 Crash took place because of the formation of G-5 (Group of 5) in 1985 that was organized to force the dollar down, no different than Roosevelt accomplished with his 1934 confiscation of gold and the devaluation of the dollar. The problem was, those in charge had no practical experience. They knew not the repercussions within the global economy. The Japanese had been buying nearly 40% of new debt offerings and they were heavily invested in US real estate. Once the politicians stated they were banning together to force the dollar down by 40%, they failed to realize the complex nature of the economy. They assumed that lowering the dollar value by 40% would allow the US to export more by devaluing the costs of its production. However, that also meant that those who had purchased US debt would lose 40% as did those who purchased US real estate and stocks. Thus, the stock market crashed. People called the brokers asked why people were selling, and they could not articulate why when there had been no domestic change in fundamentals. It was the lack of fundamental news that caused the panic!
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