The investment world has an embarrassingly short attention span. But frankly, it is a necessity. If daytraders, hedge funds and other horses in the carousel actually had to look beyond the next week of market activity or study back on market history in comparison to today, then they would not be able to retain their blind optimism, which is exactly what is necessary for them to continue functioning. If they were all to examine the global financial situation with any honesty, the entire facade would collapse tomorrow.
At bottom, it is not central bank stimulus and intervention alone that drives equities and bond markets; it is the naive faith and willful ignorance of average market participants. There is a problem with this kind of economic model, however. Reality is never kept in check indefinitely. Fiscal truths will be exposed, one way or another.
How does one know when this full spectrum shift in awareness will occur? Well, theres no science that can help us with that. While basic economics is subject to the forces of supply, demand and mathematical inevitability, it is also subject to human psychology, which is another matter entirely.
This post was published at Alt-Market on Wednesday, 05 October 2016.
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