Saturday, August 3, 2013


Since March 2009 the total amount of goods and services produced by the U.S. (or GDP) has increased by $2.3 trillion. However, the total capitalization of the U.S. stock market has grown by $12.3 trillion.

So what's happening? In a few words, the growth in the market is tied to low interest rates and regular money dumps from the Federal Reserve. Artificially cheap money has allowed market players to both game and energize the system in ways most Americans don't understand, which explains our surging stock market in a recession drenched economy.

Commenting on these developments former Reagan budget director David Stockman makes it clear that our markets aren't real because they are "medicated" with low interest rates from the Federal Reserve. In the process of institutionalizing the Greenspan Put we've also destroyed capital markets.

Worse, Stockman adds, because the stock market is so dependent on the Federal Reserve capital markets in America are now "dead" while Wall Street has effectively become a "branch office - branch casino - of the central bank." The end result is that there is no free market in America because "you can't have capitalism if the capital markets are dead."  

- Mark 

No comments: