The boys at Fairfax will eventually likely be right. But where they and the money management firm they reference has been dead wrong as the market hits new highs everyday is in the Fed's ability to game markets higher. The markets going higher everyday is a direct effort by the Fed to try to create their so-called "wealth effect" strategy. Which is essentially gaming markets higher to try to spur animal spirits (getting consumers to borrow and spend more because they "feel" wealthier). Sure, we know how this ends (badly). But it doesn't end while the Fed is pumping in $85 billion a month. While the Fed can't directly affect Velocity they can and have been trying to affect it indirectly by getting people to spend their money as their assets go higher. So far it's been an epic fail as velocity continues its downward spiral. which only means that they'll all too likely continue onward--with even more at some point. Because Ben has been all too vocal about not ending his programs anytime soon because he thinks stocks are cheap. And if Ben thinks stocks are cheap, by golly, he will make them go higher. The end.
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