The Dow Jones Index of traded shares values in the USA hit 40,000 yesterday, for the first time. This is the index over the past ten years:
The blue line is the index and the black line the volume of shares traded. The increase in both over time is apparent.
What is not apparent is the reason for this exuberance.
The US economy is doing better than that of the UK and Europe, but not that well.
The climate crisis is real and not reflected in this value.
A fascist has a good chance of becoming US President.
The head of Blackrock is discussing whether there will be a US dollar debt crisis (fairly bizarrely, but reflecting market sentiment).
A deeply destructive US trade war with China is under way.
There are two major wars in progress.
The USA is an increasingly unequal society, extracting ever more value from its lower and middle classes to feed the vanity and greed of its rich, as this index indicates.
Ever more resources are being dedicated to totally meaningless speculative activity that adds no real value to society, as the volume of trades shows.
The likelihood that we are looking at a Ponzi scheme is high.
Much of this value is based on the supposed profits to be made from AI, that could destroy many, many millions of jobs in the USA and elsewhere, with no politician as yet comprehending the need to address this issue, and the destruction of value implicit in it.
But, the markets are are at a high.
And Biden is getting none of the credit.
The disconnect between markets and reality is becoming ever more apparent and yet still all our politicians think themselves able to prioritise is the increase in that blue line on that chart as if nothing else really matters , because the growth in it - as a proxy measure of the increase in the wealth of the already wealthy - is the only goal that politicians in the US and UK now really think matters.
This is what the US and UK share in common. No wonder the political systems, and democracies, of both countries, appear to be so bankrupt.
When the pursuit of ever greater wealth for the already wealthy is the goal of society something has to break.
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But when? Watching it all continue and continue is depressing.
Along with Richard’s posts I always read Gary’s Economics. Their views on the richest seem identical.
Not on MMT
But on much else, yes
Jason Hickel in his free online book “Less Is More” page 78 nicely describes the need for endless profit growth in market capitalism as a juggernaut but also its Achilles Heel in regard to making the planet uninhabitable:-
https://dl1.cuni.cz/pluginfile.php/1179270/mod_resource/content/1/Jason%20Hickel%20-%20Less%20is%20More.pdf
Thanks
I agree with him
30 years ago, St Lucia, Marigo Bay (where the original Dr Dolittle was filmed). With then wife – on small (32 foot) rented yacht. Across the narrow entrance cruises a brown behemoth – so big it has a helicopter after deck & a seaplane in the middle. It chugged into the (smallish) bay looking for somewhere to anchor. Our mouths were in fly-catching mode. Got story later from restaurant. The owner of large turd-brown motor yacht was something in the US auto-industry (exhausts I think). When he bought the yacht it had no space for a sea plane and thus – it was sawn in half and “extended”. The rich, mostly insane, most of the time. But the rest of society gets its cues from them & one of the cues has been conspicuous consumption – the charity actions by the rich are mostly tokenism. As I asked my then wife at the time – “wonder if Marigo bay looks different from a $200m yacht”?
In a related area, a friend was telling me how wonderful we were hosting a Ukrainian family for more than 2 years & how most people would not do this. I found the remark puzzling, To me, if you have space & resource, why would you not? I don’t regard what we are doing as “good” – I regard it as normal. My grandmother, living in a slum in the 1930s adopted a boy whose mother had died and who was going to be sent to some sort of home for orphans. She raised him. Thus somebody living in poverty could still find charity for somebody even worse off. Gran thought that what she did was normal.
Perhaps as one becomes richer – connections with the lived reality of most people (and their misfortunes) who are not well off fade? Strange times.
Plenty of research shows that the rich think they are nit that rich and that they are normal. Their relationship with reality virtually ends.
What a realistic and bleak picture you paint, Richard.
How can we get this picture transmitted to the wide public?
I share with many friends and family but probably preaching to the converted…
I wish I could aswer that one
I am using the videos to try to reach new audiences
To quote Dirk Bezemer,
“On the macro, society-wide level, there must be a growth in indebtedness of the economy when assets are traded at rising prices.
This indebtedness takes the form of both rising commitments for the real sector to finance asset transaction out of wages and profit, and rising actual debt levels. When the asset was sold at a profit, someone else bought the asset at the new, higher price. He or she financed this either by diverting liquidity away from real-sector transactions, or by borrowing – at higher levels than did the first buyer. Therefore asset price booms are accompanied by rising debt and by a slowdown in real-sector nominal growth.”
– Bezemer, Dirk J (2009): Banks As Social Accountants: Credit and Crisis Through an Accounting Lens. https://mpra.ub.uni-muenchen.de/15766/
Well noted