Is This Time Different?

Authored by Jim Quinn via The Burning Platform blog,

“We will not have any more crashes in our time.” – John Maynard Keynes, leading British economist, in 1927

“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.” – Irving Fisher, Ph.D. in economics, Oct. 17, 1929

The lesson from history is this time is never different. Another lesson is never believe the “experts” who benefit from the existing bubble staying inflated and have financial incentives to help inflate it to greater proportions by lying. I wonder whether Keynes and Fisher were even slightly embarrassed when the market bottomed in 1932, 89% below its 1929 peak. Probably not. “Experts” just move onto their next grift.

The chart above shows multiple manias in the last sixty years where market bubbles formed over several years, only to collapse by 50% to 80% after the mania subsided and the hype machine ran out of the “expert” hot air.  The current Magnificent 7 mania has put the all the other manias to shame. The stocks are up by a factor of 30. By comparison, the Nasdaq 100 went up by a factor of 12 before the dot.com collapse. The Magnificent 7 ten year share price increases are: Amazon +1,027%, Apple +1,294%, Google +586%, Meta +1,011%, Microsoft +1,254%, NVIDIA +38,130%, Tesla +3,993%.

I wonder if the stock pumpers who came up with the Magnificent Seven title know it is from a classic 1960 western, starring Yul Brynner, Steve McQueen, Charles Bronson, James Coburn, among others. I also wonder whether they know the majority of the Magnificent Seven were slaughtered in a shootout at the end of the movie. Let’s hope the same fate doesn’t await these “invincible” stock cowboys.

Another lesson from previous bubbles is the closer you get to the bubble popping pin, the narrower the number of stocks leading the charge. The S&P 500 is up 57% in the last two years, while 75% of that gain can be attributed to those seven stocks. You never know what will trigger the collapse, but once irrational exuberance turns into irrational fear, look out below. The fear produced by DeepSeek a couple weeks ago sliced 20% of Nvidia in a few days. A recession or investors regaining common sense will be enough to trigger the next stock market collapse.

“The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil. Perhaps this is inherent. In a community where the primary concern is making money, one of the necessary rules is to live and let live. To speak out against madness may be to ruin those who have succumbed to it. So the wise in Wall Street [and in the professional and credentialed class] are nearly always silent.” – John Kenneth Galbraith, The Great Crash of 1929

Galbraith makes a point which is more true today than it was in 1929. The Wall Street shysters do not give a f**k about you, the community, the nation, or anyone but themselves. The “greed is good” mantra is what drives every decision they make. If they have the opportunity to rig the system in their favor, they do it. Insider trading, they do it. Bribing politicians, they do it. Forcing the wimps at the Federal Reserve to cut rates, they do it. Anything to keep the party going. When it is getting late and they decide to leave the party, they lure the rubes into the market with assurances of never ending positive returns.

Mom and pop investor sentiment is now at an all-time high. Margin debt is near an all-time high. The smart money is exiting, while billions are pouring into the market from the dumb money crowd. They’ve forgotten how they got fleeced in 2001 and 2008. Oh well. Maybe they’ll learn this time. This time is different in that we are in the midst of an everything bubble. The Case-Shiller national home price index is at an all-time high, up 85% from the previous bubble high in 2007 and up 130% from the 2012 post bubble low. A housing price bubble with 7% mortgage rates is seeking a pin.

Interest rates have gone up since Powell buckled to the demands of his Wall Street owners and started cutting rates with markets at all-time highs and inflation most certainly not under control. He has lost control of rates. He cut rates because there are over $500 billion of unrealized bond losses on Wall Street bank balance sheets and $1.3 trillion on his own Federal Reserve balance sheet. I wonder if a stock market and housing crash would force those banks to realize those losses in order to raise cash. That would start a domino like collapse. I expect this crash to be big, bad and fast. I don’t think it will be a long and winding grind, but who knows. Many of today’s ADD addled investors have never experienced a real bear market, as described by Galbraith below.

“The worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few people as possible escape the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.

The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited for volume of trading to return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next 24 months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.” ― John Kenneth Galbraith, The Great Crash 1929

In general, this time will not be different. Markets always crash when they go too high, because humans never change or learn from the past. What is different is the multiple bubbles simultaneously poised to pop. What is different is a national debt four times as large as it was during the 2007 bubble and six times as large as it was during the Dot.com bubble. What is also different is the presence of a walking trigger in the White House named Donald Trump. His daily tweets, executive orders, threats, and tariffs all have the potential to be the pin that pops these bubbles.

The Deep State is not going away without a fight to the death, so there is always the possibility they are able to “pull it” and crash the economy and financial system as a way to convince the ignorant masses Trump is responsible. 

The timing of a massive crash before the mid-terms to regain the House and Senate would effectively neuter Trump for his final two years. A massive crash could also pave the way for the CBDCs our overlords so desire in their effort to implement their Great Reset. 

A Great Taking (MUST READ) is in the offing.

Maybe they can milk another few years of stock market and housing price growth using their control of the financial system and psychological manipulation of the masses, but eventually the crash will come. I think it will be sooner rather than later, but I’ve been saying that since 2010, so make up your own mind based on the facts.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises