Wall Street is binging and things never look better when you have your own private supply. The supplier is the Fed and the juice is credit as this chart shows:
The correlation is obvious. The expansion in money supply by the Fed taking debt onto its balance sheet is levitating the market like a ghost on Halloween. The twisted thinking is that confidence in the market must be maintained regardless of what cheap money does to rest of the economy. In reality it is a private game rigged for the big banks, the big corporations, the hedge funds and other big investors. It simply cannot go on forever (See Japan and the problem of the zero lower bound). $1 of new debt only buys 8¢ of GDP:
But one would never know this dire situation if corporate mass media was the only news source to which you paid attention. Their job is to flog the market and keep people putting money into it so the real players can steal using high frequency trading, insider information, and corporate stock buybacks. Stocks are floating on a sea of leverage never before seen in US history and the market is bullish based on declining trading volume. In other words, stock prices are high due to economic policy and market manipulation, not underlying economic health, and the smart money knows it.
