The Dow-Jones industrial average fell by just under 420 points reversing gains made over the past few days of trading apparently driven by negative headlines in the U.S. and Europe about unexpected weakness in the monthly manufacturing survey conducted by the Reserve Bank of Philadelphia, a continued weakness in the housing market, a larger than expected rise in the number of jobless claims to 408,000 and the on going unresolved difficulties in the European sovereign debt crisis. As a consequence sell orders multiplied as hedge funds and institutional investors fled equities, including many blue chip stocks for the safety of treasury bills and the supposed but frankly mythical safety of gold at the bubble price of $ 1843. The yield for short term American treasuries at one point during the day dipped below 2 % and the 10 year U.S. bond ended the day at 2.03 %. So far this evening the sell off continued in the Asian markets and Dow futures were also negative. Commodity prices for oil and wheat were also down .This is happening at a time when corporate profits are very high and while the risk of a double dip recession is greater than before there is no certainty of this and the economy may well muddle through and even surprise at this point in the business cycle. In these circumstances the views of one Wall street analyst that ”no one can figure out what to do with their money” ought to be considered the final word on rational markets theory. Monetary velocity has also slowed which reflects the liquidity trap nature of the circumstances that now prevail.A fiscal stimulus that soaked up these underutilized cash balances and offered partial tax incentives for purchasers of the bonds who also created jobs would be an effective employment program at this juncture.