The Rising DOW….Built On Illusion

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This time it’s different right?

Blast From The Past – 6 Years Ago Today…

Six years ago today, with the S&P 500 around 1460 – having risen 20% without a correction for seven months – a handful of Wall Street’s best and brightest joined CNBC’s Larry Kudlow and Bob Pisani to discuss the Goldilocks economy, why the bears are wrong, and where the market is going next. Sometimes, we just need a reminder to snap us out of that recency bias… for example, Bob Pisani: “We have got a global rally going on… and the important thing is… there’s a floor to the market – every time, for the last seven months, they sell the market down for 2 days, it comes right back.”

I love this comment on Zero Hedge:

DOW 2013: This time its rigged!


Timothy Gheitner as “The Manipulator”

Barack Obama as “The Trutth Twister”

Larry Kudlow as “The Retail Inestor Pump Artist”

and Joe Biden as “The Village Idiot”

And as this is the first down week this year for the DOW I’m sure we will hear the same advice as we did in 2007. Keep calm and keep buying.

When will this end? When will the crash occur? The fed keeps printing money to prevent any dip from occuring while inflation will continue to rise. It WILL boil over, the question is when?

Exit quote:

Asset inflation often produces something called “wealth illusion,” the belief that pricier asset holdings

…The Fed policy of quantitative easing is designed to rebuild the asset inflation edifice that collapsed in 2008. German banker and economist Kurt Richebächer provided some of the earliest warnings of the dangers. In his April 2005 newsletter, he wrote that “there is always one and the same cause of [asset inflation], and that is credit creation in excess of current saving leading to demand growth in excess of output.”

Richebächer added that “a credit expansion in the United States of close to $10 trillion—in relation to nominal GDP growth of barely $2 trillion over the last four years since 2000—definitely represents more than the usual dose of inflationary credit excess. This is really hyperinflation in terms of credit creation.”

…an economy built on an illusion is hardly a sound structure. We may be doomed to learn that lesson once again before long.

Curt served in the Marine Corps for four years and has been a law enforcement officer in Los Angeles for the last 24 years.

6 Responses to “The Rising DOW….Built On Illusion”

  1. 1


    I find it hard to believe the world can go much longer without something-a major bank failure, any of the ***exits from the Euro, a revolution-starting an interconnected collapse. The Euro is held together by smoke and mirrors, it’s hard to take China’s figures at face value, Japan is facing disaster, and my home country is letting an inexperienced leftist collapse its economic system. The thing I find amazing is not what’s coming, it’s why it hasn’t happened already.

  2. 2


    Our other problem is that the “created 8 Trillion $s” has nowhere to go and therefore the DOW will probably continue to meander based solely on currency whose only value is that it temporarily is the default “World Currency”. Even though I abhor Putin, we are ‘screwing the rest of the world financially. While it Lasts?

  3. 4

    Nan G

    @Bookdoc: I find it hard to believe the world can go much longer without something-a major bank failure…..

    This is the FDIC’s own list of failed banks that it has taken over since 2000.
    Notice how the number closed shot up after 2008?

    The DOW is trending up but it is a rise built on sand.
    IF you have ”extra” money, put it into defensible property, a years’ worth store of foods, guns and ammo, a sturdy vehicle.
    Only after those things should you invest.
    Then invest in more land, foreign businesses, an index fund or two, gold, and commodities.
    Not a time to have all your eggs in one basket!

  4. 5


    How many posters here thought that the Dow was going to collapse 4 years ago when Obama was first elected ? How many here doubled their money in the stock market in the last 4 years. ? How many wish that they had? How many here are now willing to bet their money that there will be a stock market collapse under Obama and have gone heavy on shorts ? How many people here even thought Obama would win in a landslide.?

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