Financial markets are derivative of social conditions (people choose to buy and sell). The financial system's insolvency in 2008 was directly related to mortgage programs that were not based upon traditional values (terms) or actuarially supported data (income, asset, debt ratio) and metrics (race). The lending programs were mandated to increase minority home ownership and were marketed as equal opportunity and supporting an egalitarian society. Promoting stock ownership will yield the same consequences.
The 2008 election marked the climax of globalism and multi-culturalism. It was the top of a bubble of historic prop
ortions and it has officially popped. I give the university system two years before the democratic process realizes that the education system has been the epicenter of the anti-meritocracy meme and four years before the political process turns on it. Administrations that do not adapt are going to be in for a rude awakening when this recognition point arrives. I do not expect administrations to adapt and historically they do not, so it should be interesting! Value systems are "sticky."
In theory, Universities exist to create/refine the future labor force and I don't know what kind of labor force Universities think they are cultivating these days. At the same time Universities and their values are derivative of prevailing conditions and they teach to the market. The University's patron has been the Department of Education because of financial aid funding. The Department of Education's patron has been multi-national corporations. In 1980, the US didn't even have $1 trillion in debt. Today, there is approximately $1.4 trillion of student debt alone. What is going to happen when the 3.2 million students enrolled at post-Secondary institutions today do not get what they were sold?
The world is one saeculum removed from World War II and half a saeculum removed from the Nixon administration that inverted the values that made the world great post-World War II. It is no coincidence that the corruption leadership inverted from Republican to Democrat. The people aligning with globalism today are the same people who aligned with the Dutch VoC, British East India Company and Mississippi Company. Today's globalists are the colonialists of 1900!
The way things are shaping up, I believe betting on a meritocracy being restored to society around the world is the potent position and path of least resistance.
Trump's administration and inner-circle is full of leveraged buyout (private equity) magnates. Obama's administration and inner-circle was full of software, banker and hedge fund (stock market) magnates. It shouldn't take much research to figure out the broad strokes of the next administration.
Interest rates are NOT determined by the Federal Reserve. The Federal Reserve can only follow the market's demand for money OR price above it, but not below it (lose money). The synthetic (NOMINAL) negative interest rate environment without a corresponding REAL negative interest rate was achieved through fiscal policy (deficit spending) and quantitative easing (monetary policy) that caused bonds to be issued. Increasing the supply of bonds caused interest rates to move higher and the Federal Reserve held it there through purchases and sales of credit. Their Federal Reserve's portfolio serves as collateral for the US Treasury's issuance of Federal Reserve Notes (paper money). Right now, each Federal Reserve Note has slightly more than double the collateral required to remain solvent. That means the US Mint could print to double the supply of currency OR sell half of its portfolio without permanent deleterious effects. I expect the Federal Reserve to become marginal sellers to knock down asset prices. Specifically, I expect them to divest of the mortgage debt portfolio.
After asset prices have been marked down, retail investors will sell whatever stock holdings they have to flock to the security of US Treasury bonds. The Fortune 500 will likely turn into the Fortune 100 over the next decade as companies are taken PRIVATE instead of public. Not surprisingly, you can already see this phenomenon in the venture capital world. Half a saeculum ago one could make a killing research penny stocks and buying companies when they were very small. Today, the venture capitalists keep their companies until they are 80% mature and then sell them (IPO) to the public with almost no meat (growth) left on the bone.
California secession talk is hilarious to hear after the Tea party/Texas ridicule. Important historical analogues to watch:
Donald J. Trump = Abraham Lincoln
California = Texas circa 1860
Fly-over states = Union, Coastal States = Confederacy
General Mattis = Ulysses S. Grant.