When the Dow Industrials plunged to a closing low of 41.22 on July 8, 1932, the entitlement state did not exist. Phrases like Social Security, the G.I. Bill and Medicare-Medicaid simply were not in the American vocabulary.

It is of course common knowledge that the 1932 low marked a trend change, from bear to bull. Yet here's what the history books don't describe: The momentous mood shift which drove that market turn had an equally epic affect on the role of the Federal government.

Eighty years ago, it was unimaginable that the Dow would eventually reach 14,000. But it would have seemed MORE far-fetched that Federal payments to individuals (entitlements) would also eventually reach 200% of GDP...

... Yet that's exactly what has happened. The larger untold story was this: Just as the upturn in mood is the cause that drove markets and entitlements higher, so the downturn in mood will likewise drive markets and entitlements to a lower place than people can imagine today.

The May issue of The Socionomist tells that story in the feature article,

U.S. Government's 'Entitlements' Handouts:
Coming to the End of an Era

The dollar amounts behind this tale are vast, but Alan Hall's narrative plus the crystal-clear charts show that the mood and the math are all-too understandable. As he explains,

"... a brief socionomic survey of the multi-decade, social-entitlement tsunami [shows] a wave that, like all others, will eventually subside, leaving a host of unprepared riders in its wake."

Here's a flavor of the stunning particulars this study presents:

• Entitlement outlays actually exceed Federal tax revenues. This means that ALL non-entitlement spending (such as the Defense budget) is "financed with borrowed money."
• A specific time forecast for the long-term low, when "the nation should experience a historic reversal in government entitlements."
• Elliott wave labels you can see for yourself, which clearly show that "when social mood declines, per-capital entitlements tend to rise fastest."

You won't see the stunning collection of charts in this Socionomist anyplace else. Two of them deserve special mention:

• The entitlement payments to individuals as a percentage of total Federal spending: In 1945 the figure was below 5%, and in 1980 was still below 50%. But you'll be blown away by where that percentage stands now.
• The "1929 Is A Molehill Compared to This Mountain" chart -- It shows why "the forced end to the federal government's entitlement generosity should come far sooner than the Treasury's [own estimate.]"

It is a feast of a study, but this issue is a multi-course meal. Consider what more you'll discover in the current Socionomist:

Corporate stock "buybacks" -- Do they know something we don't, or, is this a conspicuously visible way that company executives follow social mood? Euan Wilson answers this question using socionomics. Case in point: Apple's recent $10 billion buyback.

Taking the Stairs Up and the Elevator Down -- Former ad man, trader and blogger Charlie Comerford explains why "the emergence of platform shoes in... bright colors suggests that very soon we may be taking the elevator to the bargain basement."

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