The US stock market has been inflating almost continuously since Black Monday in October 1987 when the newly arrived Fed Chairman, Alan Greenspan, panicked and opened up the money spigots.

^SPX data by YCharts

In fact, the S&P 500 had risen by nearly 1000% as of the recent May peak, but that was not owing to a traditional domestic business cycle or booming growth in the main street economy. To the contrary, real median household income in 1989 was $53,000 in constant 2013 dollars—–or exactly where it still sits today.

Instead, the big cap US stock index depicted above floated upwards for more than two decades owing to the great central bank Financial Bubble. On the back of $225 trillion of debt, the world economy got drastically overbuilt—–from the boom's epicenter in China and throughout the global food chain of Emerging Market (EM) economies which supplied it, the petro-states which powered it, and the Development Market (DM) economies which consumed more than they produced and financed it from borrowings and speculative windfalls.

Now the tide is receding. The global commodity crash and CapEx depression is driving corporate profits lower—-a trend line which will sharply intensify in the year just ahead.

At the same time, the central banks have reached the end of their tether. The EM banks like that of China must now shrink their domestic monetary system and credit in order to prevent monumental capital flight.  In the last five quarters alone China has had a $800 billion outflow.

The DM central banks are in an even worse predicament. They have held interest rates at the zero bound for seven years and bought up a fair share of the public debt via the fiat central bank credit of QE. But while drastically inflating financial asset prices, these radical maneuvers haven't levitated the main stream economies. Consequently, central bank credibility is evaporating fast and policy confusion, indecision and incoherence are mounting visibly.