Many believe that the old saying, "It's different this time," is never true. It is widely held that situations are never completely different; they're just another version of events with slightly divergent circumstances. "History may not repeat, but it sure rhymes," is another old saw still batted about on Wall Street.
It is believed that the reason market events repeat generation after generation is that human emotions of greed and fear always have been and always will be present when it comes to money and investing. Today's technological advances may create a contradiction to those old beliefs. They have simultaneously made life simpler and more complex, and brought an element of change that hasn't been present in the past.
Take Major League Baseball as an example. Baseball hit upon a new era with the development of steroids and human growth hormones. Old pitchers well past their prime became Cy Young Award winners. Not just one but two players broke a decades-old home-run record in the same season, only to be surpassed again within a few seasons.
It became known as the steroid era. It truly was different. Fans were enthralled by the newfound power in the game and they cheered. But baseball's commissioner had to know something was up. Those feats of athleticism had never been witnessed before, but the baseball brass stayed mum because ticket sales and TV revenues were great.Many fans were shocked to find out that the game was tainted by the use of steroids. They must have figured that players were just eating better and working out more. But no, things were different. Today, the Fed has done the same thing. It has created a new era. It has put the money-printing press on steroids. Since August, the Fed has bought 70% of all the new government debt issued by the U.S. Treasury. The Fed is, in effect, monetizing U.S. debt and creating an artificial stimulus for the economy. Fed Chairman Ben Bernanke hopes that this crutch will create enough confidence among consumers to become a self-fulfilling recovery.