Let’s start with the varying multiples generated by asset bubbles since 2001.
NASDAQ up 9.3X
Corporate profits up 6.2X
Case-Shiller Housing Index up 3X
Those are some serious bubbles, given that $1 in 2001 is $1.80 in today’s currency.
If the NASDAQ index had risen at the same rate as inflation since 2001, it would be 3,340, not 17,166.
Corporate profits would be $1.26 trillion annually, rather than $4.3 trillion. Hmm, $3 trillion a year is a nice chunk of extra change for gutting national security, quality and durability by offshoring essential industries.
The Case-Shiller Housing Index would be up from 110 in 2001 to 200 today, rather than 323.
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Since the stock market is largely held by the wealthy & corporations have bought congresscritters–these parties will strive to maintain the bubble.
Can the bubble be maintained indefinitely?
Perhaps not if the president’s tariff policy is implemented.
If the monied class turns on the president; an impeachment will occur?
Politics & the economy & self interest cannot be separated IMO.
Yes, but we all hope and pray that our stock investments rise much faster than inflation. If they don’t there is no point in investing. Corporate profits also ultimately drive stock price, so again we would reasonably expect they increase faster than inflation. If they didn’t, there is no reason to go into business.
The NASDAQ ended 2001 at 1950. So if it increased at 8%/year for 24 years, it should have reached 12,365 by the end of this year.
Based on that evaluation (which doesn’t consider if 2001 was a reasonable starting point or not) then the NASDAQ is still overvalued, but not crazed, like your article suggests.
There is [near] zero chance of such low interest rates anytime soon. That’s because money like everything else has a supply and a demand which sets the price. And the interest rate is the price of money. Right now we need to refinance many trillions of $ each year, AND we need to refinance ALL the interest on all $35T of our debt, AND we spend another extra $1T or so above and beyond all that. So our demand for money is quite high, and will remain high for the foreseeable future. With the demand so high, the probability is that the price will remain elevated. I don’t know what rates will be, but I believe there is little chance that they will be near zero again anytime soon.
Corporate taxes are already very low. Even a cut to zero wouldn’t be particularly meaningful.
And oil and gas prices usually follow economic activity. If parts of the world are in recession, demand slows and prices drop. When economic activity picks up, demand increases and prices rise.