On the surface things look pretty good considering where we were four years ago at this time. Stocks have doubled, inflation is in check and the employment is finding its footing. If those seem like modest accomplishments it's only because time has faded the memory of the near-meltdown of the entire financial system.
Despite it all the notion that Federal Reserve Chairman Ben Bernanke did the right thing by launching unprecedented monetary stimulus remains controversial. The view of the Wall Street cynics (and almost everyone on Wall Street is a cynic) is still that an economic disaster is just around every corner.
Lee Munson of Portfolio LLC and author of Rigged Money, is one of the few willing to step up and take the other side. Dismissing the doomsayers as "smart guys who sell books, who sell newsletters and tell people to buy gold and keep it overseas," Munson thinks it's long past time for the Cassandras to admit defeat.
Core inflation hasn't spiked, interest rates have remained exactly as artificially low and the dollar remains the world's reserve currency. You don't have to like any of that for it to be true. Munson also has an observation that should please devotees of the Austrian School of economics.
"We have secret austerity happening in this country," he says. "Back in mid 2010 the amount of Federal deficit spending versus GDP was 10.5%, now it's 6.5%." The Fed is printing money to pick up the slack in the middle as he sees it.
As for the market being a bubble sure to collapse once the money printing stops, Munson's view is that the fundamentals justify most of the gains in the market. Earnings are 35% higher than they were back in 2007 when stocks were last at these levels. Corporate balance sheets are dramatically improved. Sentiment is positively glum compared to the house-flipping euphoria of six years ago.
The facts at hand support the idea that what Bernanke has done was actually pretty effective. "I don't like all this debt but it still worked," Munson concludes. He'd argue the contrary as a way to pitching save havens like gold but he's not that "sleazy."
