As of today, the U.S. has seen three great asset bubbles in 25 years, far more than normal. I believe this is far from being a run of bad luck, rather this is a direct outcome of the post-Volcker regime of dovish Fed bosses. It is a good time to ask why on Earth the Fed would not only have allowed these events but should have actually encouraged and facilitated them.
If I had copied and pasted every part of this article I wanted to I would have needed to post the whole thing. But, the above is the $64,000 question. For you youngsters here, you may need to look up this reference.
It appears that there was insufficient damage done by the previous housing and stock bubbles. What did we miss? the Fed asked. “Bonds,” they shouted through their hallowed halls. Bonds! Add those this time!
I have been warning of this disorder for years; so long that I am tired of hearing myself say it. But, just because someone is wrong in the present moment – though there is evidence that even now that may not be true – it doesn’t mean that the thesis itself is not accurate. It involves timing, and timing is a bitch.
If I wanted to put on my conspiracy hat, I could say that the Fed and its masters in the political class have been kicking the can down the road. “Peace and prosperity in our time,” they chant. “I will have made mine and be out of office, political or enterprise, before it all falls apart.” Is this why?
Or, I could say it is all of the elites. Those with power, privilege and prestige have many more opportunities than the bottom 99% to profit from this insanity. They encouraged a Fed policy that would allow them to use their wide range schemes for the creating and protecting of wealth; unconcerned about the eventual damage that will be done to the much less fortunate. Is that what is happening? I think so.
Whatever the case, how could you put an innocuous explanation to the intentional manipulation of asset prices over the last 20 or so years? How does Mr. and Mrs. John Doe protect themselves? Their mortgages will be underwater and their saved wealth in stocks and bonds will be decimated. Do the people who created this mayhem for their own personal gain care about them? Apparently not.
When this all ends, as it will, we will have accomplished a hugh transfer of wealth from the small and medium to the rich and powerful. If the value of the stock in your company’s IPO falls from $2 billion to $500 million, you are still more than OK. If your already barely sufficient retirement savings fall in half or more, you are not OK.
Future history will not be kind to the architects of this looming catastrophe.