Stock Market Comments 02/05/2018

As some may remember, I thought as 2017 closed out, there would be weakness in early January. The opposite occurred. My main point was then and is now that high asset prices by virtue of the stock market are the only source of demand in the economy.

The notion that rising stock prices will move GDP higher and draw the non wealthy members of the economy into the party is the justification for the Federal Reserve policy we have known since 2008. What is a PhD in economics good for? It is of great benefit to the one who has the degree because he does not have to prove anything. No effort will be spared by the elite to prevent a stock market reckoning.

A 666 drop in the Dow, is not a good deal for the Deep State. As, I have mentioned in previous posts, no effort will be spared to keep stocks moving higher and for sure to prevent a deadly crash. That is providing the political climate does not change.

The so called bubble is nothing more than a mature political agenda. As long as the political structure is in tact, efforts to turn the market up will be ongoing and relentless. The political system does seem to be falling apart. The chances are still very good that the central banks will escalate their outright buying. Suppose the market can no longer be supported despite pressure from the Deep State and the best efforts of the central banks. The public will be forced to take the losses, as happened in 2008.

People know instinctively that the government can stimulate the economy. People also know instinctively that experts within government can make life fare and solve every problem. What folks know instinctively does not work in the real world. Instinctive behaviors change very slowly, much slower than intellect. There was a time, when faith in authority and adherence to a group was completely necessary for the task of survival. Count on people to do what they are programmed to do instinctively. Trust government. Put faith in government. The alternative is to accept complete uncertainty as unavoidable and as the way of the world. Way down deep in the reptilian brain people are compelled to treat government as a parent.

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.