Because the economy is flattened, there are few legitimate places for major _new investment_: there's no profit opportunities of note. At the same time, the authorities pushing said liquidity are exercising the opposite of stewardship over the massive funds and guarantees provided with very few constraints. Really no constraints. And it's "won't ask, don't tell" from the powers that be to the recipients of historically unprecedented, fully liquid, government guaranteed funds. Because those powers that be are in a fear funk over deflation and the political repercussions of high unemployment, so they're pushing money out by the palletful full of hope. Thus given much dough is available on incredibly easy terms but few opportunities exist for legitimate profit, we are left with three options: a) speculation, b) pecculation, c) sloth. C) is unlikely; a) and b) near certain.

When all that money in motion ends up yielding no profit, or little enough, there will be a point there the jig, as they say, is up. New crash to follow. Or more perhaps faceplant on the jagged bottom of the economic cycle.

To me, the plan pursued by US officials is madness. There are good short term reasons to guarantee liquidity backstops and use massive stimulus in a crisis of the kind we have. If one has the financial system by the scruff to the money actually goes to work and is deployed with some shred of wisdom. Those latter conditions are not in effect; are deliberately _prevented_ from being in effect or coming into effect by those at the top of the present Administration.

By that line of thinking, then, those running the government have the means to know that a secondary crash is highly likely from their behavior. If they are deluded about this, or in connivance, we need not be. ( :

The evils of traditional CPI inflation and the economic inefficiencies and dislocations that result are well-established.

With the "slaying" of price inflation, we've instead had 20 odd years of asset price inflation that has still resulted in a substantial amount of economic dislocation (i.e. FIRE sector crowding out everything else, instability)

So my thought is — between asset and CPI inflation, which is worse? Are we better off with nagging 8-9% inflation and homes that are not 10x avg incomes?

More importantly, can a capitalist system even exist without some type of inflation to allow the unproductive and well-connected to profit?

You may be right but one has to keep in mind that investors are forward-looking. Oil maybe at $70 not just because of what happens today but because of future expectation. It is possible that growth in the latter part of the year and next year is already priced into oil. It's hard to say for sure but it wouldn't surprise me if oil goes nowhere near $150 (in current dollars) even if we get growth in the future.

For instance, if emerging markets (EM) rally 40%, they are not necessarily entering a bubble. EM would still be nowhere near the peak a few years ago. If EM is entering a bubble then what was it in 2007? And if you assume EM was in a bubble a few years ago, what are the chances it will go into another bubble within 5 years? It's very rare to see the same assets or sectors enter a second bubble.

Yesterday, Issa was grilled by Liesman and Erin Burnett (would that they grilled all their banker and analyst guests in that manner), and they ended with an almost threatening tone, saying "Needless to say, we'll be following this story very closely"………….

I guess this is what they mean. Posted only after the hearing has begun, with 35 year old "facts" aimed at discrediting both the leading R and D Reps.

At least, CNBC in this case, is a bipartisan reptile.

CNBC is calling it "political games" that the Chairman of the Federal Reserve is being accused of a major coverup in witholding financially significant information from regulatory bodies during negotiations for the BAC acquisition of ML.

I must say CNBC proves its worthlessness as a source of real news every day.

So he is therefore partly responsible for the mess we are in.