Margin Debt At All Time High
Tim Knight At Slope of Hope posted some interesting charts regarding margin debt at the New York Stock Exchange and the S&P 500. It shows that margin debt and the S&P are both near all time record levels. When Austrian economists talk about the Fed's ultra low interest rate policies engineering higher stock markets, this is the most obvious and direct channel for that flow of funds.
Tim Knight's analysis, published on ContraCorner, shows that margin debt and the S&P 500 are highly correlated. However, he also shows that this correlation breaks down at key points in time: before and after the dot.com bust, the housing bust, and today.