When The Snowball Reverses

“I wrote a series of articles on the Fed versus History. If you thought the Fed could keep us out of recession, you would be a bull. If you thought History would prevail, you should stay out of the market. I bet on History. Time has shown that History won that fight. History is a tough opponent. Betting against History is usually a losing proposition.” [Bull’s Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market (2004) John Mauldin, pg 33, quoted in Riders on the Storm: Short Selling in Contrary Winds (2006), Doug Wakefield w/Ben Hill, pg 135]

September 2008 seems so long ago now. The experiment of global QE has proven from the last 9 years that the $700 billion bailout in 2008 did not end the crisis, but kicked off a world that became addicted to ongoing bailouts.

Bear markets, those declining over 20%, have disappeared since 2008. They are now in the dustbins of history. Central banks finally won; history lost. Mauldin was wrong, or was he?

Today one can read of the $2 trillion bailout of global markets YTD in 2017, yet most individuals do not seem to know, or care if they know, what has created the most complacent markets on record with prices clocking in at record highs again and again. The thought that another mammoth decline could take place, see 2000-2002 or 2007-2009, is not proper for public and private discussion or consideration.  

Bush: ($700 Billion) Bailout Plan Necessary To Deal With Crisis, CNN, Sept 24 '08

Central Banks Have Purchased $2 Trillion in Assets in 2017, Zero Hedge, Sept 8 '17

A year after stocks bottomed in March 2009, and the Federal Reserve announced the kickoff of QEI in January 2009, the American public's sentiment toward the US economy and stocks was very low.

Fox News Poll: 79% Says US Economy Could Collapse, Fox News, Mar 23 '10

Yet by this July, consumer confidence in America was at a 16 year high. What about the lessons of 2008, a period now known as the Great Recession? Removed from the mind, recent experience reigns.  

Consumer Confidence Near a 16 Year High, MarketWatch, July 25 '17

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Time To Plan for The End of a Bubble?

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