Financial markets continue to boil. The world’s equity markets are again soaring. In the U.S. and some other countries, stock markets have even attained new highs … yes, new highs. Many investors are starting to worry that they are being left out of the party. Presumably they think that since stocks markets are on the rise, the economic outlook must be improving and a new prosperity is just around the corner.

Therein lies the great deception at this time. Underlying financial and economic conditions worldwide continue to worsen. People seem to have little idea as to the human susceptibility to the dangers of deception, delusion, manipulation and corruption, all of which are currently at play. An enduring prosperity is not in the cards.

The fact is that for the third time in 15 years, a massive global financial bubble is again underway. The current bubble stands to be much bigger than the previous one which preceded the Global Financial Crisis (GFS). Why? Because the excesses of the previous financial bubble had yet to be unwound.

Policymakers have simply resorted to creating ever bigger bubbles to treat the impact of the bust of the previous bubble. What that means is that the bust of the next bubble will be even more traumatic.

How do we know another bubble is underway? Contrary to the claims of economic luminaries such as Alan Greenspan (onetime Chairman of the U.S. Federal Reserve), the existence of financial bubbles can be discerned in advance of their eventual bust. The diagnosis couldn’t be more straightforward.

Yet many influential economist and policymakers continue to deny the existence of bubble conditions. Says Janet Yellen, the soon-to-be Governor of the U.S. Federal Reserve, “[…] you would not see stock prices in territory that suggest bubble-like conditions.” We could quote many others that hold high positions of influence who are also blinded and deluded.

There are five major signs of an unfolding financial bubble. These are our condensations from the observations of such sensible economists as Charles Kindleberger, Hyman Minsky, John Maynard Keynes, Irving Fisher and a number of economists that were influenced by the Austrian School of Economics. The five basic symptoms of a financial bubble are as follows:

1. A large expansion in debt, either driving an overconsumption or over-investment binge.

2. A heavy reliance on capital gains for income and reported profits.

3. A sharply-higher participation level in an asset market (most importantly, marketable items of some kind that can be readily borrowed against, usually securities) either directly or indirectly.

4. Crucially, a misreading of underlying credit and inflation trends.

5. A “great new world” impulse, usually represented by a technological shift of some kind.

Our conclusion? Without a doubt another monstrous financial bubble is underway. All five conditions are in place. That said, what we don’t know and cannot know is how long it may last or how extreme it may yet become. Conditions of mania and delusion are very difficult to measure; for example, how do you determine that someone is twice as delusional as someone else? As we have speculated in the past, this bubble could be the last, or part of the last, sequence of bubbles and busts. Yet, it could carry on much further, entrapping a greater part of humanity. Its deceptive appearance as a new period of prosperity could mislead many, including earthbound Christians.

As the above list outlines, every period of a systemic financial bubble and/or an investor mania has had a broadly endorsed “belief” or “reason” in which investors place their faith (a great new world impulse). For example, in the last half of the 1990s, most investors were convinced that a new era had begun based upon the new possibilities of technology. Prior bubbles had expectations inflamed by such things as the invention of the telephone or the automobile.

What is it this time? We see two inter-related beliefs being adopted: firstly, that Central Bankers are omnipotent; and secondly, that macroeconomics is a reliable science.

These beliefs couldn’t be further from the truth and yet, these are the hopes underlying people’s expectations today.

Allow us to expand further upon false humanistic beliefs and attitudes that are bound to lead to great disappointment and disaster.

There is rampant and widespread economic immorality. Policymakers and macroeconomists have been carried away with their theoretical perversions and remarkably, despite their history of errors and sheer confusion, nonetheless are looked to as the world’s creators of prosperity.

Macroeconomics has been elevated to a science. That is an incredible hoax. In reality, macroeconomists are the modern-day equivalent of witch doctors. Their prescriptions for healing are utterly laughable. Unknowingly, they may even be the agents of the ultimate global financial trap.

Central banks have been set on the top pedestal of human self-determined destiny. They are seen as the new saviours, widely praised for having steered economies away from a certain world-wide depression. However, the erstwhile reality is that they have dug a much deeper grave for the world’s financial systems in the future.

To repeat, a massive financial bubble is again in full bloom — the third systemic bubble in 15 years. Another bust will surely follow.

Recently the world received a warning. There will be no exit. For central banks, accountability will not be escaped. And “thus spoke Zarathustra”…more specifically, the Master of the Universe himself, the head of the U.S. central bank. Recently, he made a big pronouncement and the world listened.

What are we speaking of? Nothing other than the announcement by Ben Bernanke of the U.S. Federal Reserve Board (Fed) that they would not “taper.” Readers might not appreciate the large kerfuffle that this caused. Many observers were shocked. Earlier, the Fed had signalled that it would like to begin “tapering.” As a result, interest rates promptly soared. Bond markets everywhere, from Indonesia to Spain, threw a tantrum. Then, when the time came for their decision on September 18th, the Fed balked. It announced it would not “taper.”

What is the “taper” all about? Simply this: Back in 2012, when the economy was again sagging, the Fed felt it could not risk a further deceleration and again began a program of buying $85 billion worth of treasury bonds and mortgage-backed securities per month. It can do so quite easily, though this might amount to a gargantuan $1.02 trillion per year. It can pay for its purchases by simply crediting banks with new reserves.

For all intents and purposes, it is a form of money printing. It’s a clever little technique, since by doing so, these actions also lower the debt burden for the federal government. The Fed collects the interest on all the fixed-income instruments that they have purchased and gives it back to the government. Voila.

But now, the Fed said it would not stop this program. They would not “taper” (reduce their pace of buying every month); they would continue. A number of conclusions and confirmations spring from this action.

Firstly, the Fed now realizes that there is no easy exit. Once the financial markets, both domestically and globally, are used to the drug of cheap and unlimited money — this being money that has not been earned by human effort and wages — they become hooked. It is like heroin. A few doses may be necessary when the patient is in triage with deep economic trauma, but no more. As soon as drug dependency is established, the exit can only be painful. This situation applies to the actions of all the world’s major central banks including the Bank of Japan (whose monetary arteries have already collapsed long ago), the European Central Bank, the Bank of England and others. Taken together, the world’s eight biggest central banks have bloated their money base by over $9 trillion over the past five years. The balance sheets of all the world’s central banks (almost all of it by fiat) now amounts to an equivalent of 32% of world economic output.

This is unconscionable. Yet, very few officials have any great worries. They have no sense of the grave immorality and kleptocracy that these policies are ushering in. Wealth distribution, extremely unequal as it is already, will become even worse. Without a doubt, that is indeed what is happening. Just why would sales of Ferraris be at an all-time high, while revenues at Wal-Mart are slowing down? (See Charts #1 and #2 on page 3.) This is symptomatic of a much broader trend.

The larcenous policies of the major central banks are indeed endorsed at the highest levels. In time, these actions will be sure to contribute to an obliteration of morality at all levels of society. To illustrate, in the great Weimar inflation of the 1920 to 30s (another era of massive monetary malfeasance, though not the same form) people would no longer wait to get married. Money was devaluing so quickly, waiting to pay for a wedding was financially hazardous. Better to cede to economic advantage and get hooked. Out-of-wedlock births soared. This is but one anecdotal illustration of the effects on morality.

What is worst of all is that central banks themselves are now unsure and confused…and desperate. They have pumped many trillions of dollars into the world economy and what do we see? Nothing more than slow, creeping economic growth in most of the developed countries in the world. Even the faster-emerging countries are facing economic decelerations at the present time. All the trillions in fabricated money has been shown to be largely impotent. (See Chart #3 which shows the trend in world trade. No acceleration is evident!)

In Europe, an economic depression is underway in many countries. While some economists are lately ecstatically celebrating the fact that economic collapse has stabilized in some of these nations, the fact remains that unemployment levels in Spain, Greece and other European countries is massive…at much higher levels than in the U.S. during the Great Depression of the 30s.

Our expectation all along has been that even greater monetary cleverness yet lies ahead. Too clever by half to this point, the major central banks have lost their reverse gear. They have discovered that they cannot unwind their actions. Should financial instabilities strike again, they can only ramp up their money creation to even more absurd levels.

More and more economists are prescribing “money finance” policies. This involves true high-power money creation. What these types of policies comprise is the direct purchase by central banks of new government bonds. In effect, central banks would be directly financing governments with newly-created money. Governments will be sure to spend this free money. What government wouldn’t? No doubt, this will cause a surge in economic activity…but only for a time. Inflation will also surge.

We anticipate that many people will be taken in by these possible actions. Thinking that a new prosperity is underway, suddenly, they will discover that it is a trap…a false, empty, fabricated prosperity.

The Psalmist brings a comforting message for those that loathe the ungodly environment of the world at this time. “This is what the wicked are like—always free of care, they go on amassing wealth. Surely in vain I have kept my heart pure and have washed my hands in innocence. Surely you place them on slippery ground; you cast them down to ruin. How suddenly are they destroyed, completely swept away by terrors!” (Psalm 73:12-13, 18-21).

“Will not your creditors suddenly arise? Will they not wake up and make you tremble? Then you will become their prey” (Habakkuk 2:7).

“While people are saying, ‘Peace and safety,’ destruction will come on them suddenly” (1 Thessalonians 5:3).