Prices of risky assets have increased in most major asset markets in recent months even as risk-free rates also rose. In equity markets, price-to-earnings ratios now stand in the top quintiles of their historical distributions, while corporate bond spreads are near their post-crisis lows.
~Fed Vice-Chair Stanley Fisher, Source: Federal Reserve website.
Ha ha ha. Yes, bogus corporations have been taking your free money, and buying back their stocks thereby distorting prices relative to actual earnings. Yes, that is all true. But what Stanley is saying is that the Fed will pull the plug on it just coincidentally during Donald J. Trump’s administration when it could have clearly have done so during the Obama administration. Yes, it is about time to stop debasing the currency. But really once you pull the plug and see the resulting carnage that ensues, I believe they’ll once again fire up the printing press in earnest, for no other reason than to keep the country afloat for a while longer. This is because the only way to handle unpayable debts is to debase the currency allowing dead beat borrowers to repay said debts with worthless scrip. Another way of looking at this is that the government will use the stealth tax of inflation to redistribute the burden of endless wars upon the backs of the people, which in turn makes rational planning impossible for business. The beauty being that a contraction of the economy will be masked even as prices accelerate. Once you have massive amounts of unused production capacity then it will be time to go to war to occupy slack production with armaments. But alas, our crazy politicians seem intent upon pushing us into a war with Russia, which will go to the fastest nuclear gunslinger. My advice go on a breakneck drive to build nuclear bomb shelters for the populace, which will put people back to work again to prop up consumption.