Since the end of World War II 68 years ago, the American economy has had a series of boom (“bubbles”) and bust cycles ... and we’re headed for the largest and last great bubble of our lifetimes.
In order to win that war, our country geared up for massive war machinery production and that production created the first of four great bubbles. During those war years, many items were rationed to the public in order to focus on production of war material. So when WWII ended and war machinery production was no longer needed, there was a huge demand for all consumer goods which were rationed and denied American citizens during the war.
That pent-up demand created the second boom (bubble) we now call “consumerism.” After everyone had all those thing that were denied them during the war, the economy went into a recession (bust). Then we had the third boom (bubble) which was a second leg of the second boom and led by technology which ended in the dot.com stock market bust.
Then, we had the fourth boom (bubble), which was the housing boom that resulted in what we call “the Great Recession” — for which we can no longer blame George W. Bush because he wasn’t responsible for it in the first place and because it has lingered on for so long. But that’s a subject I’ve already written about for those who can both read and comprehend.
We’ve recently embarked upon a fifth boom (bubble) which is currently developing in the U.S. stock market and, like its predecessors, this bubble will surely burst.
Why, you ask? Because the current record-setting gains of the stock market are unsustainable. They’re unsustainable because the structural conditions which caused the last bubble to burst have not been resolved and because the Federal Reserve and Treasury are pumping $84 billion per month into the economy to try to create jobs and GDP growth. So, what happens when the $84 billion pump stops? That’s the needle that’ll puncture that bubble.
You see, an $84-billion/month pump is unsustainable by any nation and especially one with a $17 trillion debt with no end in sight. So there you go ... another bubble bursts! And if the pump doesn’t stop soon, we will become another Greece or Argentina.
In other words, ladies and gentlemen, like a goldfish in a bowl, the United States of America has been living on a series of bubbles.
Good luck, everybody.
retired petroleum landman