The Dow smashes record high, when will the crash come?

As I write this the Dw is at 14,276, well above the record high of 2007 and seemingly set for stratosphereic heights. What is fueling this surge? Let's see where we are:

• Dow Jones Industrial Average: Then 14164.5; Now 14,276
• Regular Gas Price: Then $2.75; Now $3.73
• GDP Growth: Then +2.5%; Now +1.6%
• Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
• Americans On Food Stamps: Then 26.9 million; Now 47.69 million
• Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
• US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
• US Deficit (LTM): Then $97 billion; Now $975.6 billion
• Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
• US Household Debt: Then $13.5 trillion; Now 12.87 trillion
• Labor Force Particpation Rate: Then 65.8%; Now 63.6%
• Consumer Confidence: Then 99.5; Now 69.6
• S&P Rating of the US: Then AAA; Now AA+
• VIX: Then 17.5%; Now 14%
• 10 Year Treasury Yield: Then 4.64%; Now 1.89%
• EURUSD: Then 1.4145; Now 1.3050
• Gold: Then $748; Now $1583
• NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares
• courtesy of Investment Watch

That takes a bit of the shine off, since the underlying economics simply just do not seem sustainable.

What to do? Maintain the ability to swiftly move your stock exposure at the first sign of a correction, anything over a 7-8 percent drop in the Dow, and take a look at options to any mutual fund accounts you have to move into a safethy zone.

And this time when the Dow crash comes, as it inevitably will, the safety of gold and especially silver will be where the money flows. Get there first.

WSJ: Fed Buying 61 Percent of US Debt

Don't expect interest rates on savings deposits to rise at all over the next several years, or more, if the Fed keeps on buying up the majority of US Treasuries at this rate. And most likely they will, since no one else seems to want them anymore.Julie Crawshaw and Forrest Jones at MoneyNews give us this recap of the original Lawrence Goodman WSJ article here: Federal Reserve Propping up US Economy and presents a dire scenario. In the original article at the WSJ by Goodman Demand for U.S. Debt Is Not Limitless  (Possible Paywall) he makes the point that " Federal Reserve purchases of Treasury debt mask reduced demand for U.S. sovereign obligations." this creates the impression of stronger demand for US debt  and could be especially dangerous.

In consensus, Crawshaw and Jones make the point that the Fed, by propping up the treasury sales, may be delaying action on fiscal responsibility, perhaps even postponing "serious attempts to curb spending and narrow its gaping deficits" by the US Government.

"Without foreign buyers and a shrinking base of U.S. corporate and bank buyers, the Treasury has had to resort to the Federal Reserve itself to make the purchases. The Fed purchasing not only makes up the shortfall, but can keep long term interest rates artificially low."

So for now don't wait for the banks to start offering any reasonable interest rates soon, and look to the market for investments in solid stocks. But take care, the bulls are here for a short term, leading up to the elections. Then pay attention, because the results of this one will determine the financial future of not just this country, but of the world.