18 and 18: Coincidence?

Twenty-four hours in a day lining up with 24 cans of beer in a case is a good comical coincidence (or is it?).

Here is another numerical coincidence that is more disconcerting than comical.  The Dow Jones is at 18,000 just as the national debt reaches 18 trillion dollars  (18,000,000,000,000).  Of note is the fact that the national debt climbed by $8 trillion from 2008 as the Dow Jones added 8,000 points in the same time period.

Deficit spending seems to have a tight correlation with the movement of the stock market.  In this case, correlation may not equal causation, but they are not totally disconnected.

Imagine if the federal government had to balance the budget.  That the only money it could spend is money it went out and borrowed in the free market, or raised via taxes and fees.  Imagine again if the Federal Reserve wasn’t forcing the borrowing costs to near zero and all-time lows under a guise that employment was the main concern.  Neither is the case.

The much ballyhooed goal under Bernanke was to get unemployment beneath 6.5%, at which point the emergency measures would be pulled away and the mandate of promoting “maximum employment” would be satisfied.  Unemployment is now 5.8%, and the “emergency” interest rate policy is still in place.  Propping markets has been revealed as the true mission, apparently.  Deficit spending, when the borrowing is held to the discipline of the market (more debt, higher rates), is an unhealthy endeavor.  But not now.  Not with this new “super” Fed.

The deficit spending coupled with the easy money policy has been a boon to the stock market.  Does this explain why so little action on the deficit has been taken by Congress?  Is the stock market the “happy meter” for their deep-pocketed constituents?  Is it the same with those who populate Congress?  The deficit spending could actually be propelling a stock market that is making a select group very wealthy.  Many in this group should be greatly concerned, as would typically be their congressional duty, with burgeoning debt.  Apparently having their own set of insider trading rules isn’t enough of an edge on the rest of us.

The deficit seems to be a topic no congressman wishes to discuss.  The stock market goes up, and the only question anymore seems to be “how much today?”  If you were a heavily invested congressman – blind trust, of course – would you wish to halt the federal deficit spending, sheltered by fake interest rates from a quasi-agency, that may in fact be ramping up your portfolio day after day?  Just asking.

Twenty-four hours in a day lining up with 24 cans of beer in a case is a good comical coincidence (or is it?).

Here is another numerical coincidence that is more disconcerting than comical.  The Dow Jones is at 18,000 just as the national debt reaches 18 trillion dollars  (18,000,000,000,000).  Of note is the fact that the national debt climbed by $8 trillion from 2008 as the Dow Jones added 8,000 points in the same time period.

Deficit spending seems to have a tight correlation with the movement of the stock market.  In this case, correlation may not equal causation, but they are not totally disconnected.

Imagine if the federal government had to balance the budget.  That the only money it could spend is money it went out and borrowed in the free market, or raised via taxes and fees.  Imagine again if the Federal Reserve wasn’t forcing the borrowing costs to near zero and all-time lows under a guise that employment was the main concern.  Neither is the case.

The much ballyhooed goal under Bernanke was to get unemployment beneath 6.5%, at which point the emergency measures would be pulled away and the mandate of promoting “maximum employment” would be satisfied.  Unemployment is now 5.8%, and the “emergency” interest rate policy is still in place.  Propping markets has been revealed as the true mission, apparently.  Deficit spending, when the borrowing is held to the discipline of the market (more debt, higher rates), is an unhealthy endeavor.  But not now.  Not with this new “super” Fed.

The deficit spending coupled with the easy money policy has been a boon to the stock market.  Does this explain why so little action on the deficit has been taken by Congress?  Is the stock market the “happy meter” for their deep-pocketed constituents?  Is it the same with those who populate Congress?  The deficit spending could actually be propelling a stock market that is making a select group very wealthy.  Many in this group should be greatly concerned, as would typically be their congressional duty, with burgeoning debt.  Apparently having their own set of insider trading rules isn’t enough of an edge on the rest of us.

The deficit seems to be a topic no congressman wishes to discuss.  The stock market goes up, and the only question anymore seems to be “how much today?”  If you were a heavily invested congressman – blind trust, of course – would you wish to halt the federal deficit spending, sheltered by fake interest rates from a quasi-agency, that may in fact be ramping up your portfolio day after day?  Just asking.