Let us start with a common maxim you seem to ignore. "The economy is not the stock market and the stock market is not the economy" Kai Ryssdal often leads stories on the Public Media broadcasts of the show Market Place with this maxim.
Another point is the major stock market indexes are dominated by a few large companies many of whom are having good best quarters of revenue and profit because the pandemic is a positive good for their business.
Third, and at least you got this one, the world central banks are pumping liquidity into the market that is preventing a lot of bankruptcies.
Fourth, and you explicitly got this one wrong. Consumer spending is rising not falling, it rose in both May and June. I think you are wrong about the amount of direct cash assistance that went to individuals and the rest did not go into the market. I think that between stimulus checks, enhanced unemployment and PPP more than a trillion dollars went to individuals.
Yes, everything goes in cycles but they don't repeat they rhyme. The uncertainty in the periodicity and magnitude of the cycles makes predictions perilous. The world central banks have distorted the natural cycles. Your so called Modern economists are yesterday's economists there is a new "Modern."
When the stock market crashes (not if) it will not necessarily take the dollar down with it. The stock market has crashed many times while the dollar was the worlds reserve currency and the dollar remained the dominant currency. When the markets crash it is not just the U.S.
Even China and India will not be insulated as they have yet to establish enough internal demand to support their economies without demand from the more developed economies.
One last thing, financial markets do produce value that is often overlooked. Depending on which markets you are talking about (bonds, commodities, stocks, derivatives) they make possible cash flows and risk arbitrage. They also help set prices that would otherwise be arbitrary.
Without financial markets who would set prices and direct investments? Would you leave that to governments?
TEK
