As I’ve been chronicling with Paul Kiker lately, the stock markets are not just somewhat bubbly, they are in all-time, never-been-bubblier territory.
Record-breaking, which means when the correction finally arrives, it too should be also record-breaking.
The operative word there is “should.” But we all know that instead of allowing their fake stock market to ever correct, the powers that be will instead print the middle class out of existence.
But, as I am always diligent to chronicle, this time is, indeed, different, just not in the positive sense.
To illustrate, let’s begin with this chart:
What we see here is a very long track record of bull markets being larger than bear markets. Many in the financial industry space will use this to reinforce the idea that the future will resemble the past.
Since bear markets come but mostly quickly go, then why not just stay long in the market? To understand the possible flaw in that strategy, I’m going to introduce the underlying assumption baked in that thinking by citing the Latin phrase Ceteris Paribus.
That translates into “all other things being equal.”
The way that ties into this story is that the past 75 years of stock history was based on two things; (1) cheap and abundant energy and (2) money creation within the banking system that operated at 2x the rate of underlying GDP growth.
Which means the assumption that the future of stock price appreciation will mirror the past is rooted in the idea that energy abundance will always be there like it has in the past, and that the banking system can forever continue to generate claims and credits against the economy at 2x the rate of actual economic growth.
by rlmcclunghotmail-com