This blog post originally appeared on RealMoney Silver on April 11 at 9:30 a.m. EDT.

Kilgore (Robert Duvall): Smell that? You smell that?
Lance (Sam Bottoms): What?
Kilgore: Napalm, son. Nothing else in the world smells like that.
Kilgore: I love the smell of napalm in the morning. You know, one time we had a hill bombed, for 12 hours. When it was all over, I walked up. We didn't find one of 'em, not one stinkin' dink body. The smell, you know that gasoline smell, the whole hill. Smelled like victory. Someday this war's gonna end.

-- Apocalypse Now
Over the last 24 months, the cyclical tailwinds of fiscal and monetary stimulation have served to raise the animal spirits and investors' willingness to buy longer-dated assets such as equities and commodities (soft and hard).

The Bernanke Put (and a zero-interest-rate policy) replaced the Greenspan Put (but with a far more generous exercise price!), and market valuations have risen dramatically in the latest two-year period.

Since the market's low, as measured against trailing-12-month sales, equity capitalizations have increased as a percent of sales from 75% to 140%. And by my own calculation, stocks have risen from 13x-14x to 16x-16.5x normalized earnings. Nevertheless, bulls, such as Legg Mason's ( LM) Bill Miller, somewhat disingenuously argue that the doubling in stock prices is reasonable within the context of a doubling in corporate profits. But those same bulls conveniently (and selectively) dismiss the notion of normalized (not margin-inflated) earnings, while they liberally employed normalized earnings as justification for owning stocks when profits disappeared in the late-2008/early-2009 interim interval. ( Bank of America's ( BAC) Bianco and Yale's Shiller engaged in an interesting discussion of valuations in Saturday's Wall Street Journal.)

During the same time frame, fear has made a new low, and complacency has made a new high, as reflected in a teenage-size VIX and a marked imbalance between bulls and bears in most investor sentiment surveys. To put it mildly, and to state the obvious, market skepticism has not paid off. Indeed, the pessimists have been written off (and even ridiculed), similar to the zeal in which the optimists were written off 24 months ago.

The stimulation so necessary in keeping the world's financial and economic system from falling off the cliff has come at a cost (and with potential risks), as reflected in rising commodities and precious metals prices. The impact of policy has relieved us from the depths of the Great Decession -- I call it this because the 2008-2009 contraction was somewhere between the Great Depression of the 1930s and a garden-variety Recession -- but has arguably burdened the U.S. with large due bills, positioning the domestic economy with a potentially weak foundation for growth.

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