Or, the economy is us. There is no “economy” – you say the word and and think of it as a collective noun, but the economy is nothing other than you, me, and everyone buying shit and keeping businesses going. So, when we don’t have money to spend on shit, we don’t, and businesses go out of business, and we hear stuff like “the economy is crashing”, but that’s not true, because there is no such thing as the economy.
Oh, but wait – I hear the stock market is going up. (Repub talk for “I have no idea what the economy is but I read Econmics Today.) Up – sorry – the stock market is fine if you are a multi millionaire investor. Are you? I didn’t think so. Otherwise you wouldn’t be reading my blog, you’d be on a beach somewhere in the sun saying, “Get me another margharita with extra lime.” And don’t give me the tax bill is making America great again – again, are you a firm? Are you a corporation? Let’s not confuse profitability with improved economic well-being.
From 2 articles on the stockmarket – one in 2017, the other from 1987:
Trump’s policies may well enrich many firms, but they will impoverish the average American. We are not better off having to pay more for domestically produced goods thanks to a 35% tariff on imports. We are not better off when firms are given tax breaks or direct subsidies to keep their production in the US where labor or other inputs are more expensive, raising the costs of those goods and increasing our $20 trillion dollar national debt.*
Why is the stock market shooting up while the economy is in the doldrums? As usual with questions about economics, you can find someone to give you any answer you want. If you want to hear that the market is revealing the hidden economic strength of this great nation, listen to someone in the Reagan administration. If you want to think the bull market still has plenty of oomph, read the financial pages or talk to your broker.
If you believe that greed is always punished and what goes up must come down, John Kenneth Galbraith is the man for you. He sees in the current market a “mass escape into make-believe”, like the one he wrote about in The Great Crash 1929.
Unfortunately, the evidence is on Galbraith’s side.**
And if you really want to be afraid, read on…
The farm, fuel, minerals, steel, and machinery sectors are in deep depression. Personal, corporate, government, and foreign debt levels are at all-time highs. The unemployment rate, after four years of recovery, is about 7%, which used to be the recession high, not the recovery low. About the only booming activities are the defense industry and the business of raiding, merging, divesting, and leveraging companies.
In short, no perceivable improvement in the productive capacity of the real economy justifies the current rise in the stock market.
Then why is it rising?
Because people who have more money than they need have to put it somewhere; they prefer to put it where it will generate more money; these days the stock market is about the only place for it to go.
Since taxes were cut in 1980, there are more people with more excess money than there have been since — I hate to say it — 1929.