In a tweet earlier today, Gary Kaltbaum expressed our sentiments perfectly:
Nothing personal but I wouldn’t let Jay Powell run a lemonade stand. There is just no way to print lemons. Nauseates me that he gets written up as a genius. The same for Yellen, Bernanke, Kuroda, Draghi, LaGarde and the rest of the debt laden, easy money nut jobs.
What’s especially nauseating, of course, is that this passel of rogue central bankers have literally trashed the foundations of both capitalist prosperity and limited constitutional government. They have essentially convinced Wall Street that stock will never be allowed to fall and Washington that deficits—not matter how outlandish and incurable–don’t matter.
Needless to say, we can think of few propositions that are more destructively wrong-headed. Pure and simple, they lead to intensifying and accelerating financial instability and eventually an unstoppable system collapse.
On the Wall Street end, we are not far away. The last few weeks are reminiscent of the final blow-off top of the NASDAQ bubble in March 2000. As a reminder, here’s what happened:
- Between October 15, 1999 and March 27, 2000, the NASDAQ 100 experienced a melt-up top, climbing by 99% in barely five months;
- Then during the the brief interval between March 27 and April 14, the index violently plunged from 4700 to 3200 or by –32% in just 14 trading days;
- Thereafter, the index continued to crash, reaching 800 in early October 2002—a level 83% below its March 2000 peak and a reversion to the index level first reached in November 1996.
So as we recently averred, Wall Street has been transformed yet again into a financial kerosene dump by the geniuses in the Eccles Building. When the crashing high-flyers begin incinerating the millions of weak hands now insouciantly hitting the buy keys in mom’s basement, the idea of a financial panic will get an altogether new definition, as if the above example were only a bit of spring training.