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Bubbles Are Built on the Shaky Foundations of Ever-Expanding Debt

The Epoch Times  ( Original )
FEB 7, 2018

As we enter the 2000 redux phase of stock market bubble and eventual collapse, let’s take a step back and recognize just how similar the landscape has become to what it was like just prior to the crash that cratered the Nasdaq over 80%.

  • Booming stock market that melts up on news that is good, bad, or indifferent
  • Unemployment near historic lows
  • Real estate close to reaching subprime-era highs
  • Biggest tax cut since George Bush Sr.
  • ICOs and cryptocurrencies exactly mimicking the late ‘90s madness of Internet stock IPOs

But there is another thing eerily similar to the bubbles of the recent and more distant past, which most people like to ignore: The Fed has initiated a tightening cycle for over two years now.

So let’s remember how this exact scenario worked out in 2000, when so many other macro factors were the same as they are today.

As usual, this did not end with the soft landing the central planners always hope for and never achieve, but with a crash of epic proportions that took the Nasdaq down 80 percent in less than two years. Investors had to wait 15 years for it to see the old high of 5,132.

Why does this matter? Because the market, whether it’s real estate or stocks, is built on the shaky foundations of ever-expanding debt.

 ORIGINAL SOURCE: The False Allure of Bubble Economics by Valentin Schmid at The Epoch Times on 2/4/18