FORTUNE -- Recently the famously gloomy economist Nouriel Roubini has been talking up stocks. He says the Federal Reserve is pumping up the U.S. market and that the weak global economy will require it to do so for the next two years. That's an opportunity for anyone who has money in the market. After that, watch out.
But speaking at the SALT hedge fund conference in Las Vegas on Wednesday on a panel with other economists and financiers, Roubini come under fire for his stock market boom and bust investment thesis.
Austan Goolsbee, a former top economic advisor to President Obama, said the idea that the Fed is the only thing making stocks go up is bogus. Goolsbee pointed out that U.S. corporate profits are way up, and that the market is reflecting that. What's more, Goolsbee said there is little evidence that Bernanke has created any bubbles. Based on historical valuations, Goolsbee said, the market doesn't look expensive.
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Larry Meyer, a former Fed governor also on the panel, said that the Fed will be quick when it eventually raises rates, it won't do it slowly as Roubini suggest. He said the Fed learned its lesson in the run-up to the housing bubble. "You will never hear the term 'at a measured pace' again at the Fed," says Meyer.
But Roubini said U.S. corporate profits alone couldn't explain the stock market rise. The market trades on future growth. And he didn't see where the growth would come from. Roubini said the U.S. economy isn't accelerating. European countries are either stuck in recessions or depressions. China, Brazil, and other emerging market economies are slowing. What's more, corporate profit margins are at an all-time high. Roubini said that is likely to revert to normal soon, taking bottom lines down with it.
"Markets look happy, but what is going on in the general economy is not," says Roubini. "We are stuck in a two-year boom and bust cycle. That's what I am most worried about."
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If Roubini is right, the Fed could be tricking policy makers who think like Goolsbee into believing the economy is better than it is. That could be stopping them from doing more to stimulate the economy and hopefully create jobs -- and it could end up being the biggest downside of the Fed's policies.
After the panel, Goolsbee said he didn't think policy makers are being tricked. He said that the increase in corporate profits is a long-term trend that started before the recession and is likely here to stay. And it will presumably eventually lead to more hiring and a better economy.
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