My interpetation, we are now enjoying four, unforseen productivity dividends: (1) tech sector, (2) downsizing in the 80's, (3) emergence of 401(k) tax shelter, AND (4) the less often mentioned fall of the Soviet/East Block. The latter means that the U.S. ultimately saves trillions on what would otherwise be spent on defense, for tremendous efficiency gains. That in large part is also why the Federal Govt has almost managed a balanced budget the last few years. They're getting more money than even they know how to spend.
However,
1. They'll find places to spend it soon enough.
2. Despite these productivity dividends, our current "BOOM" is hardly one at all. Throughout the current bull market, growth has been low to moderate (considered perfect by Wall Street because interest rates are lower).
3. By contrast, earnings for the DOW companies have grown much faster than the economy, which suggests that the books are being cooked to one degree or another.
4. Lack of inflation is not ncessarliy caused by these dividends. First, growth is relativley slow. Second, while 401(k) shelter means the Fed is giving a piece of the economy back, it also means that money that would otherwise be spent is invested (i.e, demand for securities, not goods). So you get stock inflation instead of inflation inflation.
To a large extent, people don't understand what's actually going on. I'm beginning to accumulate gold stocks. Give the bull market another 2-3 years. People will wake up, demand for gold will skyrocket as we witness the grandaddy of all crashes.
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