No Ponzi ever lasted forever.

I've been getting some comments which basically assert that the markets can go up forever if the federal reserve wills them to.  I just want to clear up this notion for anyone who will listen to reason.  I have already provided charts that show that margin debt is at a record high.  It is not free to carry margin debt!  And when you have hundreds of billions of margin in play, the debt service adds up to real money.  Even if margin debt interest rates are just 4%, the current annual payment on this is 17 billion dollars given the fact that the debt pile is around 450 billion.

And that is just for the NYSE!!

That is 17 real billion dollars that must be extracted from Mark and Patsy BEFORE paying salaries, computers, buildings, cars and expense accounts of wall st fat cats.

Because of this, the markets are in a situation of grow or die.  One the price appreciation wanes, the participants need to GTFO else they will have to pay for market losses as well as margin debt.

As for the argument that the fed can just print the money from thin air to keep things growing, the only problem with this is that the fed can do math.  They know that market must increase by more than the cost of margin debt each year.  So the market must go up by 5 or 6 percent per year every year on average else the herd of market participants will go broke!  The fed is not going to sign up to keep spending 6% more each year on markets because eventually it shows up in the price of meat and butter and eventually society begins talking about income inequality.  An increase of N percent per year is an exponential function folks.

Which is exactly where we are today.

So this is why the fed tapered to zero and I do not think they will be able to turn it back on for several reasons not the least of which the people now understand that QE is welfare for the rich and this is one reason why people voted in conservatives during the mid terms.  The people are waking up and they are becoming activists all over the place.  So it is no longer the easy walk in the park to use public money to bail out markets that it once was.  Even rich people are beginning to fear a pitchfork revolution.

The next step will shock most people.  Instead of supporting their corporate buddies, the government will now begin fleecing them.  The insiders will turn on each other.  Corporations which thought they had a nod and wink deal with politicians will see said politicians turn suddenly honest because the people are now watching closely and the people are not going to be stupid and forgiving like before.

The recent conservative vote by the people sent a message to politicians and they are damned well beginning to react to it.

These are the reasons why the games will end.

And right soon at that.