So when and as they complete their pointless mission, the question recurs as to why the posse of fools in the Eccles Building can't see that they are inflating one hellacious financial bubble; and that when it blows it will deconstruct their entire 7-year project of make-pretend recovery.

In fact, if it weren't for the monumental pain and suffering the next bubble collapse will bring to main street, you might even be tempted to urge them on toward the Wile E. Coyote moment just ahead. After all, if 84 straight months of ZIRP and $3.5 trillion of fraudulent debt monetization (QE) brings nothing more than another thundering financial collapse, it will be curtains time at the Fed.

And here's why they can't duck the blame this time with tall tales about a global "savings glut" causing lax underwriting in the mortgage market, or the lack of transparency on Wall Street balance sheets.

The fact is, stock prices are just plain nuts and the evidence is all there in plain sight. And so are the intense and manifold economic headwinds arising from all around the planet—–to say nothing of the advanced age of the US business cycle.

At this point, 75% of S&P 500 companies have reported Q3 results, and earnings are coming in at $93.80 per share on an LTM basis. That happens to be 7.4% below the peak $106 per share reported last September, and means that the market today is valuing these shrinking profits at a spritely 22.49X PE ratio.

And, yes, there is a reason for two-digit precision. It seems that in the 4th quarter of 2007 LTM earnings came in at 22.19X the S&P 500 index price. We know what happened next!

Actually, we also know that the warning signs were then everywhere, but they were ignored by the Fed and Wall Street's "goldilocks" infatuated traders alike. In fact, S&P earnings had peaked at $85 per share in the June 2007 LTM period and were already down to $66 by the fourth quarter.