Given the sequence of events that have transpired this year, it's harder to imagine how there won't be a crash.
The year started off in 1929 style with the implementation of the tax cut and record stock market inflows:
Jan. 26th, 2018: FOMO Market Sees Record Inflows
The tax cut was passed a year ago yesterday. One year later the cost in capital loss exceeds the value of the tax cut many times over:
Yesterday, having listened to this surreal interview with Richard Fisher former president of the Dallas Fed, I was musing on the fact that the Idiocracy needs to add their own chapter to The Wealth Of Nations. Titled "Printing money, the secret to effortless wealth".
The interesting part begins at 3:40:
Scott Wapner: "Maybe the market knows more than the Fed does"
Scott Wapner: "Maybe the market knows more than the Fed does"
To paraphrase Fisher's response:
Fisher: "We floated the stock market for ten years, from the 666 Book of Revelations low until now. It's been a heck of a ride, but markets come and go".
Not shown in this clip, Josh Brown makes the argument that now the stock market IS the economy. Meaning that trickle down Ponzinomics now drives both consumption and investment. And since the Fed drives stocks, therefore the Fed IS the economy.
The only problem with serial asset bubbles as a proxy for an "economy" is that they are a zero sum game. Corporate insiders sell into them and the public at large buy into them. Then they collapse, leaving the rich richer and everyone else poorer.
Fisher went on to say that zero interest rate policy created an "infinite rate of return" via the discounted cash flow model. The policy "worked", because capital flowed back into markets immediately . And yet in the prior argument he stated that there is no such thing as infinite rally/expansion. Which means that the Fed incentivized over-investment in an asset bubble that they both purposefully inflated and are now purposefully collapsing. All by manipulating investor myopia and slavish devotion to the annual corporate bonus incentive.
Bernie Madoff is serving time for the exact same type of deception that is now the basis for our economy.
ZH: S&P 500 Liquidity Is Lowest On Record
The only problem with serial asset bubbles as a proxy for an "economy" is that they are a zero sum game. Corporate insiders sell into them and the public at large buy into them. Then they collapse, leaving the rich richer and everyone else poorer.
Fisher went on to say that zero interest rate policy created an "infinite rate of return" via the discounted cash flow model. The policy "worked", because capital flowed back into markets immediately . And yet in the prior argument he stated that there is no such thing as infinite rally/expansion. Which means that the Fed incentivized over-investment in an asset bubble that they both purposefully inflated and are now purposefully collapsing. All by manipulating investor myopia and slavish devotion to the annual corporate bonus incentive.
Bernie Madoff is serving time for the exact same type of deception that is now the basis for our economy.
ZH: S&P 500 Liquidity Is Lowest On Record
