Melt up

{{Economics}}
'''Melt up''' is a term that refers to the general improvement of the value of the [[Secular market trend|stock market]] not correlated with improvements in the fundamentals of the economy. This usually refers to bubble type movements, where investors buy into an asset because the growth is rocketing upwards instead of fundamentals of the asset, or the result of general [[inflation]].

This term was bantered about after the [[Boom and bust|housing bubble crash]] due to the [[Banking crisis|credit crunch in 2008]]. It was an attempt to explain the increase in the market while the unemployment rate still remained very high<ref>[http://www.businessweek.com/magazine/content/09_49/b4158024378700.htm Business Week - Behind the Great Stock Rally of 2009]</ref> in 2009 and 2010. It was stated that if the market "melted up" that unemployment would continue to remain steady or increase while the market would continue to rise at the level of [[inflation]]. What was not taken into account is that [[Behavioral economics|people are panicky creatures]] and general market fears after a bubble bursts can push market prices of certain assets significantly below "fair value". A recovery in value can occur even without improvement in the fundamentals and is known as a "dead cat bounce."

The recovery was predicted to be a painful one, but unemployment decreased<ref>[https://web.archive.org/web/20190722222205/https://data.bls.gov/timeseries/LNS14000000 US Bureau of Labor Statistics Data, "Labor Force Statistics from the Current Population Survey" (2009-2019), Series ID LNS14000000, July 22, 2019, accessed July 22, 2019.]</ref> and market levels have exceeded the level of inflation.{{cn}}

==Cranks==
This term is a new favorite of [[cranks]] attempting to explain<ref>[http://www.trevorloudon.com/2010/05/melt-up/ Supposedly a "Must see! (If you can handle it). A very credible and highly pessimistic view of US economic prospects"]</ref> why their economic apocalypse predictions are in no way disproved by economic improvements.<ref>[http://inflation.us/videos.html National Inflation Association - The Second American Revolution has begun]</ref> Many [[cranks]] like to champion that every investor is just "going along with the herd," while they are brighter than all the [[sheeple]] who will get caught in the coming hyper-inflation.<ref>[http://www.youtube.com/watch?v=yOjq1oww3FA YouTube - Meltup The New Inflation Documentary]</ref> This way they can rant "Don't worry, it will happen. ''Just you wait''" as the economy slowly improves and people go back to ignoring them again.

What is really great about those [[crank]]s that love to rant about how the "melt up" will eventually implode is that they are the most likely to never invest a dime, even into bank accounts. What eludes them is that greenbacks stuffed into a mattress will be just as worthless as an investment account if there is a total economic collapse, while if it doesn't happen they lose buying power from inflation (at 1-3%) and those invested in market indexes gain at least inflation (usually 8-10%, much more than inflation). In addition there is a risk of some one throwing out the mattress,<ref>[http://www.nbcnews.com/id/31203790/#.UV4nsPGxv3w Woman mistakenly junks $1 million mattress]</ref> while accounts are covered by FDIC/SIPC if the bank fails. Every year the economy doesn't collapse they get even more ragingly pissed off at those who invested.

==References==
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[[Category:Economics]]

Categories: Economics