Why does the stock market keep going up when the economy feels so bad? It’s the question we probably get the most and, quite frankly, it’s not a bad one. The primary reason equities seem invincible is because of the dramatic increase in the money supply over the past four decades. That explains the supply side of the equation at least. But a lot had to happen behind the scenes to allow for the money supply to be absorbed into the financial system and ultimately benefit a fraction of the population.
The simple answer is fraud. The market is a measure of how much wealth can be extracted from the working class. It’s a misery index.
The stock market lives off the levels of exploitation of those who actually do the work. When the economy is bad, it might still support strong levels of exploitation, just because workers are more vulnerable when the economy is bad.
My take is that the the “market” isn’t a market at all. People like to think the price of an equity is where supply and demand meet on an order. Market makers manipulate this, ostensibly under the guise of liquidity and price discovery, but actually under the premise that everything must go up.
It’s a long story, but fractional reserve banking means the economy MUST grow or it collapses. In times where real growth is insufficient, market makers and central banks just goose everything with inflation so the must-grow imperative is met.
The kink in the plan is that we are on a finite planet and infinite growth is impossible. As ag yields and birth rates taper, there is no real net growth to be had. Our system is literally incapable of coping with this scenario with anything other than inflation or collapse.
Edit: Time for a new system. Something that can handle our descent and taper to a steady state.
Because the suffering of people is the prime indicator that the extraction of value demanded by capitalism is operating at peak efficiency.
