This market is doing what every phony rally in history does, which is to pull in as much money as possible before rolling over (again) and heading into oblivion. The latest sentiment making its rounds is that a *new* bull market has begun. Yet contrary to this late breaking euphoria, I can't be impressed by a market that has had an unprecedented $8 trillion of combined monetary and fiscal stimulus thrown at it and still hasn't taken out its high from 2007 - or from 2000, for that matter. It's mind boggling to realize that a mere money market account has outperformed the stock market on a thirteen year timeframe - with zero volatility. Not something we will ever hear the dunced cheerleaders at CNBS ever talking about...
This starkly illustrates the depth of desperation at this juncture, that *we* would be willing to waste that much money for so little result. There is absolutely no accountability for what is being done with all of that money, which amounts to a massive burden in the future - either via taxes, inflation, or most likely, a massive deflationary asset crash from totally unsustainable levels. The asset crash scenario has only happened on two prior recent occasions, so why would we expect that again?
All of this phony "Extend and Pretend" was due to the critical Krugman Assumption which I first presented six months ago. The Krugman Assumption is the fantasy that government borrowing and money printing can indefinitely offset a decline in private demand - even though the level of private demand ("consumption") was unsustainable in the first place. Put it another way, that second bubble that we see in the middle of the chart above represents the level of consumption we are trying to maintain, even though that level itself was inflated by the housing boom and massive private debts. Similarly, that level was an attempt to replicate the prior "DotCom" sponsored bubble level which was itself inflated by over-speculation and unsustainable stock market valuations. So now we are in this third bubble to the right, attempting again to replicate the unsustainable level of spending that we inherited from the prior two bubbles...
You get the idea. Only a fucking moron, or a government policitian, a Faux News anchor, a PhD in Economics, a Central Bankster, a Wall Street con artist would actually think this is in any way a good strategy...
