BUT THERE IS A PROBLEM THIS TIME...
THE US ECONOMY HAS BEEN OPERATING OUTSIDE OF THE NORMAL RULES OF ECONOMICS FOR A VERY LONG TIME... THIS IS PARTLY DUE TO THE INFLUENCE OF BRETTON WOODS ON THE "MAGICAL" US DOLLAR... AND PARTLY DUE TO THE HUGE ROLL THAT CHINA HAS PLAYED IN THE US ECONOMY....WHICH IS REALLY UNPRECEDENTED IN ANY KNOWN ECONOMIC MODEL...
UNPRECEDENTED? BUT WHY?
BECAUSE NO OTHER ECONOMY IN THE HISTORY OF THE WORLD HAS EVER SELF-DESTRUCTED...SOLELY FOR THE BENEFIT OF ANOTHER COUNTRY...
AMERICA ESSENTIALLY "DE-INDUSTRIALIZED" ITSELF AND MOVED PRODUCTION TO CHINA... THIS OF COURSE CAUSED MASSIVE BALANCE OF PAYMENTS PROBLEMS... BUT AMAZINGLY THE US ECONOMIC ELITE WAS SO FEARFUL 1970'S STYLE WAGE INFLATION THAT THE MOVE WAS JUSTIFIED IN THEIR MINDS IN THE NAME OF SHORT TERM GAINS...
THEN CAME THE ERA OF BUBBLES...WHICH SUBSTITUTED FOR WAGES FOR THE NOW "UNDER-EMPLOYED" AMERICAN CONSUMERS... FIRST STOCKS, THEN THE INTERNET AND DOTCOMS, THEN HOUSES...NOW PERHAPS BACK TO STOCKS...OR ???... AGAIN...WITH THE FED HYPER-INFLATING THE ECONOMY WITH MASSIVE INFUSIONS OF PAPER MONEY...
THE POINT IS THAT RECENT HISTORY...THE BUBBLES HISTORY...IS NOT A VALID GUIDE TO THE FUTURE...NOR IS THE PRIOR HISTORY WHERE THE US WAS BEING OPERATED UNDER "STANDARD ECONOMIC THEORY"...BEFORE GREENSPAN, BERNIE ET AL...DISCOVERED THE "LOOPHOLE" IN THE KEYNESIAN BRETTON WOODS MODEL WHICH ALLOWED THE TOTAL LOOTING OF THE US ECONOMY ALMOST TO THE BONE...
WHICH ALAS, IS WHERE WE ARE NOW...
AT THE END OF MARKET HISTORY AS A VALID METRIC FOR THE FUTURE...
WHAT WE HAVE NOW IS NOT MARKET HISTORY ...
BUT PERHAPS MARKET FICTION...?
OR, EVEN MARKET FANTASY... OR SCI FI...!
