End of the (S&P500) Rainbow

Will there be a pot of gold at the end of this rainbow? Depends on your definition. I think so, because we'll have foregone the impending deflationary cycle that haunted Japan for 20 years.

When will the madness stop? Well we should have been asking that when banks were lending for 500k houses without concern for financial credibility. If I start giving money to people that can't prove their worth you better bet I'm going to go broke.
Let me ask another question. Where does a country hide most of its inflation? Stocks and real estate is the correct answer. A country keeps most of its money within its borders and the Federal Reserve was printing money so fast the borders were ready to burst at the seams. The stock market was rallying and home prices shot up faster than anytime in history. The symptoms were there and only a few investment banks saw them. During this time of inflation in housing and equities (high order consumer goods) we saw food and energy (low order consumer goods) stay quite low and affordable in comparison.
These definitions are from http://www.goldonomic.com/
Inflation is not an increase in the price level of goods and services. It is a more than proportionate growth of credit and money supply. The consequence of this growth is mostly, but not necessary an increase in the price level of goods and services.
Deflation is not a decrease in the price level of goods and services. It is a reduction of credit and money supply. The consequence of this action is mostly, but not necessary a fall in the general price level of goods and service.
Considering the definition of inflation we are waiting for equities and real estate to hit fair prices before a rally can resume. Fair house prices would be similar to the cost of building. Fair equities prices might be near the 2002 lows when the Federal Reserve started bailing out banks. Thanks to the credit crunch we are seeing a little deflation to let the air out of the balloon so I'm not anticipating the 2002 lows thanks to our concurrent problem with credit which seems to be a blessing in disguise.
While high order consumer goods are being deflated we see low order consumer goods inherit a lot of their inflation which is why we see energy and food rallying through the roof. At the end of the day when we see housing bottom and equities find fair prices we'll still have this high food and energy bill for a couple more years. It's almost like a tax or interest rate from the drunken debauchery and cheap money lending for high order consumer goods.

Now we have to ask ourselves; is anyone else guilty of similar crimes? The answer is a resounding yes and every developed nation is guilty of doing what the Federal Reserve did.