It is now happening again.
"Margin debt – newly created money that is plowed into stocks – is the great accelerator on the way up. It inflates values and increases leverage, and when it spikes, it performs miracles. But it has a terrifying habit: after going into a majestic spike, it reverses abruptly right around the time stocks crash.
Over the last 15 years, margin debt had three spikes and reversals:
The first spike peaked in March 2000 at a record of $278.5 billion, or 2.66% of GDP. By the time it reversed in April, the stale air was hissing out of stocks with epic speed.
The second spike peaked in July 2007 at $381.4 billion, or 2.60% of GDP. In November, stocks began to swoon. No one will ever forget what happened next.
The third spike – the most phenomenal yet – peaked in February 2014 at $465.7 billion, beating the prior record by 22%. It reached 2.73% of GDP, the highest ratio ever! In March, the spike reversed. And in April, it declined again."