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Dow 6500 at start of Obama, today it crosses 17,000.
Due to the fact that the Fed has artificially kept interest rates well below market levels by buying hundreds of billions of dollars of their own debt, thus creating massive interest obligations that the government tries to reduce by forcing interest rates down. The Fed does not actually print money to purchase its own bonds (debt) and merely runs a balance sheet trick, creating fictional cash that the government then spends. This is called "monetizing the debt."
Treasuries that are more valuable don't have to pay as much in yield to get buyers. A lower yield drives down interest rates on the U.S. debt. Lower interest rates means the government doesn't have to spend as much to pay off its loans. This is money it can use for other programs.
The net effect is that it is as if the Treasuries bought by the Fed didn't exist.But they do exist on the Fed's balance sheet. Technically, the Treasury must pay the Fed back one day. Until then, the Fed has given the Federal government more money to spend and increased the money supply. This is called monetizing the debt.
http://useconomy.about.com/od/monetarypolicy/f/fed_monetizing_debt.htm
The artificially low interest rate creates, as a consequence, an artificial increase (inflation) in the stock market. As a basic market premise, as interest rates decline, money seeks a better return on the stock market than in bonds. Additionally, since businesses trading on the NYSE carry debt, a reduction of interest rates lowers the company's debt, and makes the company look more profitable. That two-fold effect increases the stock prices.
If you sat down in an economics class today, you would probably learn that there is a negative relationship between interest rates and the stock market. In other words, when interest rates fall, the stock market rises and when interest rates rise, the stock market falls. There are two main reasons why this happens.
The first is that stocks appear more attractive when compared to bonds.
http://money.usnews.com/money/blogs...l-rising-interest-rates-hurt-the-stock-market
Therefore, your premise that stock market inflation is a "good thing" is and always has been wrong, since that increase is nothing more than the Fed buying hundreds of billions of dollars in debt and artificially keeping interest rates below market level to hide the empty economy we now have.
21Steelers21 said:He saved us from a Depression and now we start the biggest boom in American history.
He most certainly did NOT "save us from a depression." You have zero background or education in macroeconomics, that is clear. Why don't you cite a credible source - an actual investment, monetary, research or academic publication - postulating that the United States was heading for a "depression"??
Here are the GDP data showing how wrong you are - and showing that Bammy made the economy much WORSE in his first year than what he inherited. (Is your theory that he "saved us from a depression" by making the economy much worse??):
Gross Domestic Product 1978-Present and Projections through 2016
Comparison of Unemployment Levels - Obama vs. Nixon, Reagan, Clinton and Bush (Bammy is the WORST ... even WORSE than GWB)
United States Employment Levels as Percentage of Population (Not good for Bammy)
United States Debt/Deficits (Not good for Bammy - his debt and deficit to GDP is exceeded only by the money spent fighting WWII)
21Steelers21 said:I predict severe labor shortage by 2016.
Then start a business supplying temporary labor. Why don't you put your money where your mouth is?
Yeah, actually pay for something and take a risk, predicated on your prediction? Not going to happen, is it?