Why this money torrent…will last… or won't last.
If the grinning buffoons on CNBC are an indicator of bull market bubble madness, then the market is set to soar higher.
But by the same token, the grinning buffoons are just as much a sign to tread carefully with this market too.
Seriously, we haven't seen so many smiling faces on that business channel since… well, since the last unsustainable price bubble.
The torrent of new money that's about to flood into global markets will push some asset prices higher.
Just beware, don't be fooled into thinking that because the stock market is strong that it'll result in a strong economy.
Right now markets are high. And by that I mean they're high on drugs… money-printing drugs.
High on cheap money. When that happens mistakes are made, more risks are taken, and eventually a lot of money is lost.
An example of how dangerous - but profitable - this rally is was a caption we saw on CNBC this morning. We've searched their video archives to see if we can find the clip, but we've come up blank so far.
Anyway, the gist of the caption was along the lines of, "Why QE3 and QE4 are on the cards." That's not exactly what the caption said, but as I say it was the gist of it.
It's the mania of the quick drug-induced hit. The Fed announces it's going to print money and sure enough stock prices soar, and bond yields collapse… oh, and gold is up over 3%, besting the 2% rise of the US stock markets. And silver is up a whacking 7%!
Now that market participants and central bankers have seen how easy it is to create an asset bubble, guess what, they'll use their powers to try and keep that bubble expanding. Hence QE3 and QE4.
A fuller version of this article was published on Money Morning Australia on November 5, 2010.
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