Wall Street ≠ Economy

We have constantly been told that the American economy is strong. An increasing number of Americans know this just isn't so. The problem is that Wall Street has come to equal the economy in the minds of policy makers. For a majority of Americans this is simply not the case. In fact Wall Street has become part of the problem. The once noble purpose of Wall Street has been replaced by something that more closely resembles a Ponzi Scheme. The value of stocks seems to have little or no relation to the economy that most Americans experience. If you notice "stimulus" plans are usually designed to restore confidence - keep stock prices up. Once again the Federal Reserve is lowering the interest rates to prop stocks up. The last time this was done it resulted in a a sub Ponzi Scheme - the housing bubble which did what it was intended to do, run up the market. Of course like all ponzi schemes it couldn't last for ever and didn't.

Another thing that has driven up corporate profits and stock prices is also unsustainable - outsourcing the US economy. The US economy became the power house that it did during the 50s and 60s. The reason that occurred was a strong middle class which translated to customers with disposable income. Yes, the consumer has been spending but not with earned income but through debt which can't be sustained. The inevitable consequence will be a big crash - maybe this is it maybe not but it will come. All Ponzi Schemes eventually come crashing down.

Also see Smoke and Mirrors. This is the important part:

As Murray Rothbard explains, in The Austrian Theory of the Trade Cycle, America’s debt-driven "prosperity" is a mirage built upon the opiate of easy credit. Alan Greenspan’s multiple interest rate cuts, as Dr. Rothbard conveys, is nothing new in the field of central banking:

… the point is that the credit expansion is not one-shot; it proceeds on and on, never giving consumers the chance to reestablish their preferred proportions of consumption and saving, never allowing the rise in costs in the capital goods industries to catch up to the inflationary rise in prices. Like the repeated doping of a horse, the boom is kept on its way and ahead of its inevitable comeuppance, by repeated doses of the stimulant of bank credit.