In the first quarter of 2000, they spent more than 99 percent. Strong consumer spending has increased corporate profits. High profits have raised stocks and business investment. Suppose weaker consumer spending put the whole process into reverse. Inevitably, the Fed is flirting with trouble.
History provides scant comfort.
Countless speculative booms have ended badly. Asia's financial crisis of 1997-98 is only the latest. Banks overlent for office buildings and factories that could not generate the income to repay loans. But while it lasted, the lending pushed stock prices higher and unemployment lower. The same happened in Japan in the 1980s.