The Pit - IMI Trust

I was studying some charts recently, and the above equation is so obvious when you look at the charts.

Now, this isn’t a political post, this is an observation which is clear to anyone who looks. More importantly there was an announcement in the US recently, which gave me an insight into the short to mid term direction of the markets.

Look at the chart below…..

So far the US alone has invested over $430 Billion into funding the war in Iraq. No, when you think about how war stimulates economic growth, some other factors come to mind. Firstly, in economic you are taught the ‘residual value of a dollar.’ For example, every $1 spent, a portion goes into someone else’s pocket, then they spend that money, and then it goesinto someone else’s pocket and the cycle continues.

So $1 spent, can have a total value to the economy of over $3 - $4. Why is this important? A few months ago the US Congress approved an additional $100 Billion in funding for the Iraq. The trend of the markets over the last few years in response to war, is a good indicator of future funding of the war and its impact on the markets.