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Stock volatility an econ signal?

EconoMeter panel interprets recent ups and downs

Roger Showley, U-T SAN DIEGO

Friday, October 3, 2014

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Kelly Cunningham, National University System
Answer: YES

The recent market volatility reflects turmoil and weakening of economic growth across the globe. As the U.S. continues borrowing money from the rest of the world to buy the goods the rest of the world produces, the U.S.’s bubble economy becomes ever more vulnerable to correction. Elevated stock, bond and real estate prices are not justified by surging U.S. economic growth, but instead upon zero percent interest rates and quantitative easing. The U.S.’s ability to sustain this illusion of economic growth increasingly becomes weaker and eventually investors will fully realize the charade and cause the U.S. stock market to collapse.