Ideas pop up in the media. When other commentators & investment advisors, looking for material to justify their salaries, pick those ideas up and repeat them, you’ve got a recipe for a market rise. More and more people pick up & pass on the idea, and the price rises as more and more people listen and crowd in. They believe because everybody else believes. They buy because the price is rising.
Only one problem: when everybody expects the same thing, they’ve already placed their bets and for lack of buyers the market collapses. Government and central bank actions — “surprise parties” — exaggerate these reactions. Right now the dollar and stocks are priced for perfection. Markets rarely grant perfection.
Right now, everybody who wears pointy Eye-talyun shooes on Wall Street is certain that Mother Yellum will begin raising interest rates AND SOON. Problem is, they haven’t quite thought that through. Sure, Mother Janet, with two eyes on the labor market, is going to raise rates and risk slowing the economy while unemployment still rages? Is she going to raise rates in the face of Japan & Europe suppressing rates & QE-ing themselves to death, thus pricing US products out of world markets?
More, you just let Mother Yellum get a whiff of something scorching in her Wall Street kitchen, that is, you let stocks burn a day or two, & she’ll come out of that kitchen a spittin- & a-printin’ money like a threshing mo-sheen.
Mother Yellum, as all socialists and fascists, has a problem: the more you control an economy, the more you have to control. Totalitarians must become totaller. Their excuse is always, “It would have worked, if we’d done more of it! We need MORE control!”
And get out of your head the hogwash notion that QE and ZIRP have saved the world or the economy: they haven’t. They saved the banks, which is all they were meant to do. They’ve starved any recovery.
Problem for socialists — ALL socialists, American, German, Russian, or Chinese — is that socialism doesn’t work. Therefore they always need MORE control. Now so many central banks have entered markets — and I’m not talking merely about central banks KNOWN interest rate and currency exchange rate manipulations, I mean in all stock and commodity markets, and central banks around the world — that there ain’t much free anything left. After all, a central bank with bottomless pockets can run a market for a long time, as the present stock rally proves.
So the question becomes, when will the wastage of socialism finally catch up with the socialists? The Soviet Union lasted 70 years, and US socialism ain’t far behind, & piling on control by the second.