David Kelly

It was about 212% before the tech bubble burst back in 2000.

It was 87% before the 87 stock market crash.

You know, it's leverage upon leverage.

High P.E.

ratios on a very high level of earnings relative to GDP.

Now, I still think this is a very good economy for equities, but I wouldn't say that you could call the market depressed at this stage.

I think that, you know, one of the dangers here is that everybody gets out over their skis and then you have a significant market correction or a bear market.

Yeah, because it's a different economy.

And we keep on talking about, oh, the Fed's going to tighten to lower inflation.

Forget about it.

The Federal Reserve's short-term interest rates are not impacting growth.

They're not impacting inflation, but they are impacting financial markets.

And the big problem that we've had in this

century of the 2000s hasn't been cpi inflation getting getting out of hand it's asset bubbles you know whether it's housing bubbles or or tech bubbles and the federal reserve should not be in the business of blowing up bubbles so i think they should you know just take it easy i don't mind if they cut rates a little bit here but i certainly would have a problem if they cut rates below what they think neutral is if the economy is you know is not threatened by recession because we are we are seeing

money go into financial markets, go into financial assets and just not come out.

And it's sort of it's kind of like a stuck valve.

And the more money goes in, the more this market just seems to accelerate upon itself.

I think the dual mandate itself, I think that Congress needs to recognize, they need to recognize that monetary policy has significant impacts on financial conditions and therefore maintaining stable financial conditions should be part of the goal.

It's kind of like with the ECB, who for years decided they weren't supposed to intervene if one particular country got into significant economic distress and destabilized the euro system.

And then finally Mario Draghi said, look, if Greece is a problem, we've got to do something about Greece.