Central bank rate cuts are inflating a cheap money bubble

Sven Henrich in CNN Business –

Last month US markets once again hit a little-known but highly relevant ceiling which has spelled market trouble numerous times in the recent past, most famously during the major market bubble bursts in 2000 and 2007.

Investors should recall what happened then, take note and brace themselves for the possible implications.

What is that ceiling? It’s when overall stock market capitalization vs. GDP reaches a point historically disconnected from the underlying size of the economy. We are in such a period again, having recently reached a ratio of stock values to GDP of 145%.

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About Radnor Reports

Ken Feltman is past-president of the International Association of Political Consultants and the American League of Lobbyists. He is retired chairman of Radnor Inc., an international political consulting and government relations firm in Washington, D.C. Know as a coalition builder, he has participated in election campaigns and legislative efforts in the United States and several other countries.
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