Why the U.S. Stock Market Keeps Breaking Records: The Truth Behind Long Bulls and Short Bears

Why the U.S. Stock Market Keeps Breaking Records
Two surprising political resignations marked a deeper truth in global finance. In 2022, UK Prime Minister Liz Truss stepped down just 49 days into office following a failed tax cut plan. In 2024, Japanese Prime Minister Fumio Kishida resigned amid concerns over soaring national debt.

What caused these swift exits? National debt adjustments: the UK added $50B and Japan aimed to cut $22B. Yet, the U.S. added $5 trillion through stimulus and saw no market backlash. The answer lies in America’s unique advantage — its “monetary sovereignty.”

1. The Foundation: Dollar Hegemony and “Exorbitant Privilege”

Coined in the 1960s by French Finance Minister Valéry Giscard d’Estaing, “exorbitant privilege” refers to the U.S. dollar’s role as the world’s reserve currency. This allows the U.S. to print money and collect seigniorage while other countries must earn dollars through trade.

Research suggests this privilege allows the U.S. to maintain debt levels 22% higher than other economies without destabilizing its system. That’s why a $50B debt increase can shake London or Tokyo, while the U.S. absorbs $5T with ease.

2. History Favors the Bulls

Since 2008, U.S. markets have not only recovered from crashes but surged to historic highs.

• S&P 500 dropped 36.61% in 2008, then rebounded 22.60% in 2009.

• From March 2009 to 2024, S&P grew nearly 868%, while Nasdaq exploded over 1,500%.
  Even events like COVID-19, interest rate hikes, and geopolitical tensions have proven to be pauses — not ends — to America’s equity rally.

3. The Ultimate Weapon: U.S. Liquidity Power

When nations face liquidity shortages, the U.S. has options others don’t:

1. Quantitative easing via bond purchases

2. Lowering interest rates and reserve requirements

3. Issuing Treasury debt

4. Central bank swap lines

5. Direct money printing (if needed)

This capacity gives the U.S. a virtually unlimited ability to inject capital — an advantage no other economy enjoys.

4. Global Capital Flows Are One-Way

Whenever crisis hits — a pandemic, war, or oil shock — capital flees toward the U.S. Why?
Only the U.S. markets have the liquidity and trust required for global-scale capital safety.

• After COVID, U.S. markets recovered fastest due to Fed stimulus.

• In 2022 and 2024, conflicts in Europe and the Middle East pushed funds back to U.S. equities.

5. The Debt Paradox

America’s $36.9 trillion debt (124% of GDP) should be alarming. Yet investors keep buying U.S. Treasuries, and equities keep soaring.
Why? The U.S. borrows in its own currency — and can print more of it. As long as global demand for dollars persists, U.S. debt acts like a magnet for capital, not a warning sign.

6. Systemic Advantage: Why the Bull Runs Deep

America’s market is built on:

• Rule of law

• Innovation ecosystems (e.g., Silicon Valley)

• Deep capital infrastructure

• Dollar supremacy

Even if other nations mimic the first three, none can replicate the fourth.

7. Will It Last Forever?

Challenges are emerging:

• Rise of central bank digital currencies

• Growing euro/yuan influence

• Shifting geopolitical alliances

But for the next 10–20 years, dollar dominance seems unshakable.

Conclusion

Seeing through the structure of financial systems is essential. As long as the U.S. retains its monetary advantage, its stock market will continue to be a global safe haven. But investors must stay rational: every hegemony ends eventually.