ombow: Money printing to support an economy that cannot pay its bills is money printing. The only difference (so far) is a matter of degree. The principle remains the same. Government around the world have played Russian Roulette with debt and one of these days a bullet is going to go off. We have now gotten to the point where the Federal Reserve is the largest holder of Treasury debt in the world...they own more Treasuries than China or Japan. We have the Euro Central Bank buying ALL the bonds being issued by Portugal...more monetization. The ECB is borrowing Bernanke's playbook. But all this money printing just buys time and makes the aftermath that much worse. You're slightly older than I am. Surely you remember the aftermath of the money printing we did in the early 1970's, the resulting inflation, gas lines, 15% mortgages, 14.99% car loans,etc. What happen to stocks back then?
I have to rely on what has transpired in the past. If things were OK we wouldn't be seeing absolute record setting insider selling accross a multitude of industries. We wouldn't need the extraordinary steps being taken by the Fed....juicing the futures, POMO monetization every single trading day, sometimes twice a day as with Monday of this week. History has shown that when any tradeable asset is artificially inflated the eventually result is a crash in that asset. It works until it doesn't and then the bottom falls out. There is no question in my mind that the stock market would be some degree lower if the Fed were not intervening with POMO money and their other methods to inflate asset prices. But this strength in asset prices is being created artificially. I don't know how much longer it will work but I can't jump to the long side. I forsee too many economic problems going forward and money printing is only a finger in the dike..it buys time, nothing more.
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