The Centrally Planned Stock Market

print

Government tampering with the financial markets started during the Reagan administration after the stock market crash of 1987. The President’s Working Group on Financial Markets (Plunge Protection Team) was created ostensibly to prevent crashes like occurred in 1987.  Notice the word ostensibly. Government initiatives do not begin for apparent reasons.  It was true in 1987 just as it is true today. Self interests generates public policy, not concern for the overall population. The President’s Working Group on Financial Markets was created as a means for anointed human beings to make trading profits regardless of natural market forces. Over time, the Working Group became more of a stalking horse that could be pointed to as inactive as a clandestine organization evolved and has been totally active in elevating asset prices.

In today’s trading arena, despite fancy words from Federal Reserve Chairs and others, QE and other named activities have only one objective and that is to elevate asset prices, especially stocks. Government economic policy, especially that of the central bank has been totally focused on that one goal, higher stock prices. Gross Domestic Product has increased for no other reason than artificially created asset values. The result has been government created wealth at the top echelons of economic power. That wealth has translated into high spending by all at the upper end of the food chain ladder.

The incomes and lifestyles toward the lower end of the food chain have suffered just as if the recession of 2009 had not ended. Actually recessions never end until and if markets are allowed to clear. The natural process of out with the old and in with the new never occurred. That doesn’t mean it will never occur. It means that when it does occur, it will be a disaster. Stimulus never serves a purpose other than to enrich a small part of the population at the expense of all others.

As time is rolling forward, the rot at the bottom of the economic ladder has become massive. The only means of generating positive GDP numbers here and in the rest of the world is for the wealth and income of the worlds richest citizens to continue increasing. So, all of the worlds resources are now focused on preventing even a minor correction in the stock market. All other markets which would have cleared had the 2009 recession been allowed to reach completion. Today we still have the imbalances that created the situation in 2009 plus a guarantee that a fall in asset prices, especially stocks, will user in a bigger recession/depression than the first one.

The only way to save the United States is to allow markets to function pristinely. Saving the economy in the short run is not as important as saving it permanently. Just know that creating artificial value in the assets of politically powerful people may have already destroyed both the economy and our political system. If the process is allowed to continue the country and our way of life will indeed be destroyed.

The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.

 

Fantasy Free Economics recommends the following blogs.

Of Two Minds Liberty Blitzkrieg Mises Institute Straight Line Logic Paul Craig Roberts

 

About Fantasy Free Economics

James Quillian is an independent scholar,free market economist, teacher and originator of the Fantasy Free approach to economics. Contact: news@quillian.net
This entry was posted in Daily Comments and tagged , , , , , . Bookmark the permalink.

1
Leave a Reply

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  Subscribe  
newest oldest most voted
Notify of
Robert White
Guest
Robert White

Look at the numbers pragmatically and there is no possible or potential way that anyone can stop the world from experiencing mean reversion on all asset classes in the entire world due to Dr. Greenspan’s black hand in on the Greenspan Put that primed the asset bubble to unmanageable proportions. Greenspan thought that he was his own reviews after the Great Unwashed Masses kept referring to him as ‘maestro’ during the heyday of irrational exuberance foisted upon us by the Ponzi crew of neocons & neoliberals hell bent on a race to the bottom of civilization faster than you can… Read more »