We have been here before. Storm clouds brewing, seemingly unsustainable price rises defying all known economic logic and crowds of clever analysts warning that it cannot last. Yes, the US stock market is a confounding beast. Calling the big one has proved a bad career move for strategists, columnists and even august journals such as the Economist which last week came out with a bubble economy waiting to burst assessment of the world's best performing equity market. The reason, of course, was the US economy's startling ability to exploit new technologies and lean management to achieve inflation-free growth. Asia's economic bust has perversely helped with cheaper imports capping price rises. Robust earnings and low interest rates underpinned the new paradigm. That none of the above now apply is what has the naysayers in such a tizzy. Earnings growth has slumped to zero, and with industrial utilisation figures, housing starts and inventories all stretched inflation lurks. And yet assuming the worst, that prices take off and the Federal Reserve moves quickly to raise rates does this mean the end of the bull market? It surely means turbulence - markets never fully discount rate rises - but with a new industrial economy being forged, surely nothing more than a blip. Fed watching is a mugs game, especially from the considerable distance of Hong Kong. The key point is that the US central bank is charged to preserve price stability and sustainable economic growth. Chairman Alan Greenspan, while warning of irrational exuberance more than a year ago, has manifestly let the stock market find its own level. The wild card is the misty link between the real economy, monetary trends and price of financial assets. When the latter are high the benign glow cast across the whole economy means early warning signals are rarely heeded. That no two crashes are the same means sage warnings based on past tumbles usually miss the mark. Too much money, borrowed too cheaply, chasing a limited supply of goods as any economics student knows, means inflation. Broad measures of US money supply growth are the highest in 25 years. Narrower definitions like M2 growth are clicking along at 10 per cent. And yet, lending to households, industry and commercial ventures has been stable over the last year. No prizes for squaring the circle. According to Dresdner Kleinwort Benson Bank lending to finance brokers and dealer purchases of securities have increased more than 50 per cent year-on-year. Low interest rates have bank-rolled investor purchases of stocks and treasuries in a self-feeding spiral, it argues. Extending this logic, some time in the last six months the US stock market stopped simply discounting ahead future earnings growth and took off on a trajectory fuelled by easy money and boundless optimism. Since the October 500-point fall the Dow Jones Industrial index has risen 20 per cent. Now, a spate of banking mergers is providing the rationale for more price increases with value being created where profits cannot deliver. One school sees this as simply an extension of the shake-up in US industry, going on since the late 1980s; another, evidence of late-stage bull market madness. If correct - after all the Federal Reserve's own models of fair value suggest equities are 25 per cent over-priced - the question is what will trigger a correction? Who knows, but that is what keeps things interesting.