The above is a quote from a ex federal reserves bank, Janet Yellen (https://www.usnews.com/news/articles/2017-06-27/janet-yellen-i-dont-see-a-financial-crisis-in-our-lifetimes). As ridiculous as it sounds or as illogical as it sounds, and after thinking about this for a while, I think she was right.
The reason she was right is not really because of intrinsic properties of the markets or the economy, but rather due to the feds puts that seems to be available whenever the “financial markets”, the 1% needed it.
Ben Bernanke introduced the “green shoots” in 2009 and since then the market has been on a tear (https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart). Asset prices has been rising and the feds even acknowledged that their policy was helping “stabilize” the housing market, i.e. inflationary in that regard at least.
There was not much for Yellen to do, since the interest rates were already at 0% and feds where buying bonds left and right. All she had to do is keep the punch running.
2016 rolled in and here comes the Trump euphoria, the good old “fuck everything to make money”, which has been the policies of the country for a while, but he really took it to the extremes. Eliminating regulations, shrinking the governing apparatus, appointing public department destroyers to public offices, such as Rick Perry as Energy Secretary and Betsy Devos as secretary of education, tax cuts for the rich, allowing corporations to appropriate foreign capital and bringing to the US, etc. It is the wild wild vest. The markets, to show you how socially responsible this nation is, rallied again from 2016 to 2018 with almost 25% appreciation.
Powell comes in, and he tries to raise the interest rates, actually Yellen started it. But soon that plan came to a halt. The pressures from the institutions and from Trump driven him to almost turn 180 degrees. Now we are patient about raising interest rates and the balance sheet will be kept way higher than normal. This signals the last “stunt” by the feds to attempt to slow down the markets. It is down hill from here on.
The only thing that will crash the stock market or the housing market or any other market here in the US is something that the feds are not able to control whatsoever.
The picture internationally is not much better, all the central banks of the civilized nations have sold their people to the rich and not too famous. But further more, the world is becoming super connected. So if a glitch hit the system somewhere, the whole global financial systems, and I refuse to call it economy anymore, will come crashing. That is particularly true with China.
So what is coming, housing markets in the US, Canada, and Australia, Brexit, European social unrest, middle-east unfinished ware of 48 to today, China slowing down, Oil prices, etc. Something is going to come unhinged and the rest of wagon is going to flip.
In the US in particular we have the dollar which is still the official global currency. Fluctuations in the interest rate or liquidity can squeeze the emerging market. Too much liquidity can dilute the dollar and drive interest rate to the moon bringing either bigger debts that will exacerbate the situation or larger taxes that will not be welcomed. So the situation is very fragile and that is why you see the talking heads on all financial propaganda channels rush to the rescue with comforting theory and regurgitated analysis to reassure the public that the picture is still rosy.