Actually, financial markets are exactly as instable as they always have been. Precisely the same pyramid schemes burn through the economy via different sectors with different names, with regularity. The leveraging (and naked shorting) that were the cause of the '29 crash and kicked in the Great Depression is precisely the same as the various real estate bubbles of the past thirty years, the late 90's stock bubble (which was NOT just in tech stocks, as is so often stated), the current housing and private equity bubbles, the junk-bond and Savings/Loan messes of the 80s.
They all boil down to: people with the ability to manipulate the market, do. They "produce" and package investment "products" via leverage which, basically, amount to selling stock that doesn't exist, and putting money down on paper that also does not exist. At some point, obviously, this is owed to someone. Who is it owed to? Who comes calling? People at the bottom of the pyramid scheme. These "products" were sold to the guy managing your pension fund. Pension funds, hedge funds, private equity bagholders? Broke. Day traders? Broke--they're a huge cornerstone of every market pyramid. Day traders overwhelming lose money. By a huge margin.
There's nothing new under the sun, including this. What's changed is the pace, and the post-dating, if you will, of many of the consequences. Since the States' experience with double-digit inflation in the 1970s, monetary policies with the nearly sole goal of minimizing such have had a stranglehold on the public discourse--and the Federal Reserve. This has been addressed on two fronts:
1. Manipulating the definition of "inflation" to keep consumer confidence up, and keep the turnover of money going. The Consumer Price Index, which is the number in the Sates that the media trumpets as the be-all-end-all of inflation, no longer includes, for example: mortgages; health insurance; tuition and other education fees; etc. It also uses some silliness to try to account for the "deterioration" in the quality of goods and services, leading to assumptions such as: cars are higher quality every year, and hence the same car (one that *isn't* higher quality) supposedly "costs" less though the cost has gone up. Some of this is outright manipulation, some is just methodological absurdity, but there it is.
So, while the average person *knows* they're getting pinched more all the time, supposedly "inflation" barely exists so we should all be happy!
2. Pumping "money" into the economy via the devices mentioned above. Much better than printing real money is to "create" it by selling things that don't exist to one person, and selling the obligation to either produce it or otherwise compensate that "purchase" to someone else. This is, essentialy, what most of the financial market is. Thus, trillions of dollars are "created" out of whole cloth... for those lucky enough to be at the top and middle of the pyramid. (Those at the top are by a huge margin the beneficiaryies--that's why they do it--but some people in the middle, who are in the right place at the right time, can benefit. For example, cashing out a retirement fund or investment in the company when you switch jobs. IE, getting out before the reckoning hits.)
This, of course, is not to disparage *real* creation of wealth, which comes from production, value adds, and etc. As opposed to play money "creation" which you sucker someone else into paying for.
So, where are we? Keep "inflation" stats low and real inflation tolerable --> Now you can keep interest rates artificially low (only reason to raise them, in the inflation-fighting world, is to deter impending inflation--and nobody cares that things like savings accounts no longer pay any interest, because you should be investing your money in the market, stupid!) --> "renting" and "creating" money is cheap, so there an absolute glut of it out there. So the old cycles are accelerating, because so much more money is feeding in. So we get one bubble after another, with each (as noted above) being more or less the same pyramid con under different--not yet regulated by the SEC--names.
But there's one further distortion... because none of this money, and many of the investment vehicles (the stocks, the funds) don't actually exist in any meaningful sense, there are all sorts of tricks that can be done to hide these huge outstanding debts until someone actually comes calling for their money. So we've only seen mini-"corrections" after each bubble, in fact. When millions of people have lost their homes, are perpetually broke because they can't declare bankruptcy, and cannot borrow anything because their credit is ruined, we have a nasty "correction" going.
When 75 million boomers (including many in the group above) come calling for their pensions and investments and find out that a lot of it doesn't exist (because that's where the financial market huckster sold an obligation, rather than an actual investment) that's a depression.
Maybe. We'll see!
