{"id":56932,"date":"2021-02-27T09:19:33","date_gmt":"2021-02-27T14:19:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=56932"},"modified":"2021-02-27T14:55:40","modified_gmt":"2021-02-27T19:55:40","slug":"culmination-of-fed-interventions-inflates-historic-everything-bubble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=56932","title":{"rendered":"Culmination of Fed Interventions Inflates Historic \u201cEverything Bubble\u201d"},"content":{"rendered":"
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Culmination of Fed Interventions Inflates Historic \u201cEverything Bubble\u201d<\/a><\/h3>\n<\/div>\n<\/div>\n<\/section>\n
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\"Culmination<\/p>\n

via HistoryDaily<\/span><\/div>\n<\/div>\n

We reported on last year\u2019s partial deflation of the \u201ceverything bubble<\/a>,\u201d aided in part by the COVID-19 pandemic and erratic\u00a0response<\/a>\u00a0to it.<\/p>\n

But it could be a bit premature to consider that partial crash a singular event, followed by another period of economic recovery.<\/p>\n

In fact things seem a\u00a0lot<\/em>\u00a0worse economically, and this time in the worst way possible. At The Hill, Desmond Lachman describes how the U.S. may have reached\u00a0the end of the economic road<\/a>:<\/p>\n

Herb Stein famously said that if something cannot go on forever\u00a0it will stop<\/strong>. He might very well have been talking about today\u2019s everything bubble in U.S. and world financial markets, which has largely been fueled by the Federal Reserve\u2019s extraordinarily easy monetary policy.<\/p><\/blockquote>\n

The \u201ceverything bubble\u201d Lachman refers to is easy to see in the\u00a0current<\/a>\u00a0Shiller Price Earnings Ratio<\/strong>. It\u2019s higher than the 1929 Depression, and on a trajectory towards \u201cdot-com bust\u201d levels from 2000. You can see for yourself on the latest Shiller PE chart below:<\/p>\n

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\"Everything<\/p>\n

Schiller PE measures the price to average earnings from the past ten years. Today, on average, an investor pays $34.87 to secure $1 annual earnings.<\/em><\/p>\n<\/div>\n

Both<\/em>\u00a0of the past economic peaks, the Great Depression and the Dot-com crash, were \u201ceverything bubbles\u201d. Today\u2019s\u00a0Shiller PE ratio<\/a>\u00a0has\u00a0already surpassed Black Tuesday<\/strong>\u2018s\u2026<\/p>\n

You\u2019ve seen charts before \u2013 why care about this one? A few reasons: its inventor,\u00a0Robert J. Shiller<\/a>, won the 2013 Nobel Prize for economics (and a bucket of other prizes). He\u2019s been on the list of 100 most influential economists in the world since 2008. His book\u00a0Irrational Exuberance<\/em>\u00a0came out in March 2000, warning that the stock market was in a bubble. (He was right.) Almost exactly one year before Lehman Brothers collapsed, Shiller authored\u00a0a prescient warning<\/a>\u00a0\u2013 here\u2019s the summary:<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

 <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Culmination of Fed Interventions Inflates Historic \u201cEverything Bubble\u201d via HistoryDaily We reported on last year\u2019s partial deflation of the \u201ceverything bubble,\u201d aided in part by the COVID-19 pandemic and erratic\u00a0response\u00a0to it. But it could be a bit premature to consider that partial crash a singular event, followed by another period of economic recovery. In fact […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,124,17853,309,383,4314,5821],"class_list":["post-56932","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-central-banks","tag-everything-bubble","tag-fiat-currency","tag-great-depression","tag-irrational-exuberance","tag-robert-shiller"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56932"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56932\/revisions"}],"predecessor-version":[{"id":56937,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56932\/revisions\/56937"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}