RE: The reason that the stock market is doing so well is because the companies represent real value, regardless of the worthless dollar.
Don’t forget Bernanke printing money.
Bruce Johnson of the American Thinker is correct when he observes:
As long as Ben Bernanke decides to keep money loose, the stock market will rise.
Restated, as long as one man holds to one mindset, the market will rise.
Does this sound like a free market? Or, does it resonate as a managed affair sponsored by a semi private powerful agency run by one unelected man? Bernanke is arguably the most powerful man in the word without a military.
As models and programs chase historically modest dividend returns one wonders of the fragility of this entire arrangement. The money is in a forced accommodative low rate mode by the Federal Reserve. It is reasonable to assume that free rates would be somewhere above the current near zero rates forced by Bernanke.
Rates are forced to these levels, as the reasoning suggests, because we are still in an emergency mode. There seems nothing so permanent as a temporary emergency mode implemented by a quasi government agency.
Loose money is supposed to increase employment. We can see it increases stock prices, but its impact on employment is moot.
The question is then, “where would the market be if rates were free to find their own level?” Where would rates be if the Fed didn’t lend money to the Treasury each week? Could this market handle a .5% rate increase? What would that do to all the dividend capture programs long the market?
The Federal Reserve is in an unmanageable position, and some of the board members are acutely aware of the dangers. To ease out or unwrap the Federal Reserve balance sheet would be a catastrophic awakening for the stock market
And yet I believe that such needs to happen.
It’s not simply the mindset of Bernanke that is at work here, it is an elaborate scheme of fascism that involves the extorted cooperation of the heads of industry and banking. In the end, we, the investors become willing participants in the fascism in order to protect our investments.
We have met the enemy and he is us, just as surely as the Obama administration is the enemy of free markets, because we have little choice.