An economic bubble caused by poorly-secured mortgage investments led to the 2008 stock market crash and another economic bubble has been propping the stock market to record heights.

Wealthy investors have been raking in huge profits due to treasury stimulus funded by the federal government. It's the biggest give-away of taxpayer money in history. While unemployment rates have lowered, long-term unemployment rates have increased. The national debt has shot past $17 trillion — an amount of money that is more than four times our nation's annual gross domestic product.

We're in the midst of the ongoing theft of America's future. Under the guise of capitalism and business, investors are pilfering the prosperity of generations of Americans. They've horded so much cash, those at the very top have insulated themselves from the impending collapse.

Each month, the federal government is buying $85 billion in treasury securities. It has been doing this since 2009. As the national debt continues to grow, the Federal Reserve knows it will have to stop the stimulus. Each time news leaks on the possibility that the Fed is considering this, the stock market topples.

How much the stock market is over-inflated is anyone's guess, but it could easily be by as much as 7,000 points.

The stock market has had a great year in 2013. So great that it has piled on 3,000 points just this year. But the tidal wave of profits have some people scared. Being the pied piper of economic doom is not a unique opinion. Others have been suggesting a stock market sell-off is impending.

On Friday, stock market blogger Michael Santoli said the stock market is shrinking “There are fewer publicly traded companies on American exchanges than at any time since at least 1990. A larger proportion of this narrower market falls into the small-stock category. And established companies have been aggressively pulling their shares off the market through buybacks.”

Buybacks by companies at higher prices suggest using profits as insulation against — ta da — a stock market crash.

But another pundit, Mitchel Olszak, sees things differently, “So in some circles, the Fed’s bond buying binge is seen as artificially inflating stock prices. If this buying ends, it’s reasoned, one result will be weakened support for stock prices. But then how do you explain Friday, when a report showing a drop in unemployment prompted a big runup in stocks? ... Not everyone agrees on the short- or long-term impact of such news. This produces a tug of war in the market, that can be baffling to watch, so we shouldn’t make too much of it.”

If there’s a correction, everything will suffer, including higher-risk investments that make up long-term 401(k) funds and other investments for those who plan to retire between 2025 and beyond.

Congress threw $1.1 trillion, between TARP and EESA, at the economy to recover from the 2008 crash. The negative ramifications of those financial burdens haven't fully been realized.

In modern American fashion, our economic dire straits are a situation we've created. We've allowed ourselves to be robbed blind.

There are too many freeloaders and people who feel entitled. Congress is corrupt and inept.

There is no champion for the Average Joe. Can anybody think of even one who holds national prominence? We live in a time when there are no heroes preaching moderate reform toward solvency. Such talk wouldn’t be exciting for the polarized talking heads in the media who live by the fued.

A long as government fat continues to grease the market, investors will skim profits. When the Fed does end the stimulus — it's not an issue of if, but when — how will investors, especially profit-seeking speculators, react? If we've learned anything from history we will see increases in interest rates and inflation. The government cannot keep buying its own debt and lending it out for nearly zero return. It's not economically tenable.

E-mail Matt Johnson at matt.johnson@lee.net.

(3) comments

kickapooviking

Matt Johnson asks: " There is no champion for the Average Joe. Can anybody think of even one who holds national prominence?"

I can think of several champions, but they are continually discredited by the elitist two Wall St. controlled parties, Democrats and Republicans.

Bernie Sanders. Independent Senator from Vermont who continually rails against all these investment schemes designed by the 1% to rip off the 99%. And thankfully considering a run for the White House in 2016.
Ralph Nader. He has tirelessly blown the whistle on everything wrong in the good 'ol USA for decades. Again, marginalized as a kook.
Jill Stein. This truth telling doctor who ran for President under the Green Party flag in 2008 is a breath of fresh air compared to the lying, power hungry frauds now residing in every statehouse in the country.
Matt, you get what you vote for: the lesser of the two evils is still evil...

Dennis Brault

Even inflation rates have a rich vs poor bias, which helps contribute to the wealth gap. The Guardian reports that the British inflation rate is 4.3% for poor households, while only 2.7% for rich homes. The poor are disproportionately feeling the inflationary effects our national debt.
Curiously we are in a real catch 22 with interest rates as raising them increases our dept payment, which is already $200 billion a year. Double the interest rate and our payment balloons to $400 B a year.

http://www.theguardian.com/business/2011/jun/14/poor-hit-higher-rate-inflation-than-rich

Missing the point on big economics is problem No. 1. Simplistic view of future trends is problem No. 2. Creating economic fear with a bipartisan budget is problem No. 3. Wrong in so many ways. I hope you're wrong, Mr. Johnson. 7,000 points? That's the next Great Depression. But I guess nobody can say anything until the stimulus ends. Then we'll see how much of an uninformed 'Outsider' you are.

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