Posted on 10/31/2014 5:52:01 PM PDT by blam
One factor in the strong US stock markets’ performance these last few years, is the fact the US is relatively safer and stronger, than other economies.
Just like a Ponzi scheme, they keep piling on. Every paycheck, the 401-k & 403-b portion goes into stocks, 66% of it on average. Who wins in a Ponzi scheme? The initial gamblers. Who gets caught holding the bag? The last gamblers.
Not true. China and India economies have grown 3 to 5 times faster than US economy in the last decade. Indian economy is still doing very well.
If US economy is so good why did the US markets crash in 2008, 2000. 1987, 1974, 1929?
Print money, short gold ETFs, central banks buy gold. Repeat.
China’s economy is all based on US debt and fake stimulus spending on empty cities.
I don’t know but “going Weimar” doesn’t sound good.
They are still selling us many goods worth tens of Billions of dollars every year and our trade balance is all in their favor. If we don’t buy their goods, our inflation will jump so we can not stop buying cheap goods from China.
And we owe them Trillions in debt on which we must pay interest for eternity since we have no budget surpluses as far as the eye can see to pay off the principal.
It is true China is overbuilt. But they did not borrow money to build. They just used their excess reserves.
The instantaneous response is *one* thing, the LT result/effect is probably something different.
Although I, myself, am completely neutral on gold/silver (as investments or as SHTF googahs) And I own plenty.
You/we have to admit, the central banks of the world have successfully repealed all known laws of economics, yes?
And that shirt is so soiled and stained that it stinks.
Mostly from overvaluation. The economy grew but the market grew faster. Some of those cases, e.g. 1987, were short market corrections. Your analysis is basically sound but you have left off a couple of factors. The main one is the Fed itself creating bubbles with loose money that inevitably pop. That was a factor in all of those crashes. The second is that in some cases the US was the only show in town (e.g. 1974 and on). The reason was not from strength although our economy was strong in 60's to early 70's and strong again during 80's. But because we have the ability to manipulate markets and keep people coming back before each of those crashes. It was certainly no accident that Japan had such a lousy couple of decades after they challenged our hegemony in the 80's. China knows this and is going to challenge us militarily when push comes to shove.
Up above you mentioned that foreigners have to pay not only high US equity prices but high US dollar prices. That's just part of the greater fool theory of buying stocks here. Not only do those foreigners think that a greater fool will buy their US stocks, but that greater fools will bid up the US dollar. Of course that just makes each of our corrections or crashes that much worse.
Only if they know when it's "game up" and decide to sell. When a selloff happens, it's going to be a huge payday for the gov, because of capital gains taxes.
It is beginning to seem that it will take a crisis beyond the gov's power to manipulate around it to cause a crash.
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