Puerto Rico is going to be next to default. China's stock market is deflating. Spain and Italy plus other weaker EU economies could be next in the next 5-10 years. The global poo storm is coming but hey don't worry we all can QE back to record highs :)
With rates being lowered artificially, the Fed has open up the door of greed. If you take a look at my graph. The first graph explains the positive correlation of interest rates and profit that shows how the short term economy reacts. If efficiency is no different and the rate of availability stays the same, as demand increases: profits increase, interest rates increase, growth increases. The same goes for as demand decreases: profits decrease, interest rates decrease, and growth decreases. Pretty simple to understand the economy is a positive feedback system. How does short-term implications project in the future? If the economy operates under same efficiency and under the same rate of availability: as demand grows faster than means of production, growth slows even though it is at all time highs in nominal terms (middle graph) and also as profits are at all time highs, the profits are marginally higher at a smaller percentage as the structure of production is stressed (bottom graph). Interest rates are very important in the sense of time preference which negates a lot times: greed, extreme risk taking, and our impulsive nature. Time is taken in effect in my middle and bottom graph. If interest rates are artificially lowered, projected growth is confused as it is taken as a new rate of higher growth in the long run and profits are overstated as higher profits are falsely accumulated at a faster rate than the equilibrium of the actual structure of the economy. Many projects are taken in this time that should not be, as interest rates adjust the boom slowly becomes the bust as many companies are left with unprofitable projects.
I so agree, too many low info voters. My model explains displaced profits and why money illusion exists. I cannot say this enough, the next correction is going to really hurt. It will be bigger than the housing bubble. We are around 50% higher than the trend line should be (60% or so correction)! DOW should be around 11,000 but go ol QE has everyone disillusioned about reality. Living off debt is unhealthy and that debt chokes future growth. I'm glad some here see the inevitable. This credit/debt base society will crumble to ultimately just every society that has before.
My view point:
Someone does not know what money illusion is.....the market is over valued by a lot and if you think this is permanent then pass me what you are smoking. Inflated markets are a lot like guys with big trucks: inflated egos to make up for something lacking. Btw, the stock market always looks good (boom) before a recession (bust) and the market is beginning to stall.
I want Curry on the HORNETS asap!!!!! I still don't think Curry could ever do what James has done with that team he has had to work with imo. Curry has Thompson, Iggy, Green, Livingston, Lee, Bogut, and Barnes. What does James have? A Delly sandwich, TT, Mozgov, JR, Schumpter........this series was suppose to be a sweep on paper!?!?!!!!! No Love or Irving.