The difference is I think there is a computational structure in the market which operates outside of these inputs. This is the long suffering device which has created untold wealth for a nation, a world, companies and individuals. It still operated in the most recent bull market, despite the inflationary measures of Greenspan, ignited in recent times by Volcker.
But they are not new measures, governments have always sought to increase the monetary base to create an illusion of wealth, the easy way. At the time Greesnspan did what this paper says he did, he was applauded. So was Volcker. But easy wealth is always applauded, who cares how one gets $, as long as one gets it, this is the nature of money, it is the source of many actions in society.
But as soon as the consequences hit, as they always do (and $ disappears into the night as assets deflate), then blame gets heaped on those who did this. The problem is as I said political, the Fed essentially makes near-political decisions and politicians have a very short time-frame, because they need to be re-elected. One thing is simple in politics, increase wealth and your changes of being re-elected increases rather considerably and vice-versa.
But great wealth comes to countries and those who work hard and focus and develop good ideas (shown nationally in productivity increases). This process shows in fine balance sheets which the equity market then proceeds to grow into giants. The US seems blessed by a capacity to constantly regenerate this ability which countries like the UK had in the past. This shows in its companies which thrive *especially* in times when money is scarce (all those cheap dollars seem not to being put to productive uses, indeed the investments in equities seem more targeted towards shoring up deflated companies rather than on long term investing decisions). This is the structural dynamo I alluded to which spins faster in harder times. This is the recovery hopefully gradually growing in power and subtly for now stopping the market from crashing.
Remember what I said about gravity wells ? A major technical level like 10,000, and this one is historically huge is like a massive body in space, it distorts space time and like this asset values are pulled towards it. This is the source of the 3 touches I saw in 1 min and higher charts.
Remember the stock market is not such a pure technical device as forex, it has its own computational structure, and the conduits to contend with. Either a new inflationary method will be found (but the markets may be less responsive to these now) or a recovery will liberate asset values from this and let them soar upwards again.
© 2010 Guy Barry - All Rights Reserved.
