Guessing games. How can the stock market break new records amid recent worst crisis? Is the financial world even connected to the real world?
'We're suffering the biggest macroeconomic shock since the 1930s and the stock market is fine. It makes absolutely no sense unless we see that the market is not connected to the real economy where people are," says Mark Blyth, professor of international political economy at Brown University in the US.
Blyth thinks the trajectory in stock markets is absurd when you step back and see it from a distance. A highly respected scholar who has studied crisis politics and economic ideas for the past 25 years, he has just published the book Angrynomics, in which he, along with his co-author, examines why many seem so angry these years.
Part of the explanation is found in the gap that has grown larger and larger between the financial economy and the rest of society. In his view, the only way to understand how the stock market can peak while the economy scrapes the bottom is that we have created two distinct economies, two parallel worlds:
'There's an economy with rich institutions and wealthy people who buy, sell and make a living from the gains from wealth, and then there's it for everyone else with ordinary wages. The financial economy has been separated from the real one.'
10 comments:
Bearish heads exploding!!!! LOL!!!
“There are two economies!” LOL!!!!
Hate to break the news to you MMT perma bears but “you didn’t read the MMT literature!” (LOL!!!!)
It you did “read the literature!” you would have read “it’s about PRICE not quantity!” and maybe you wouldnt lose so much money being short for the last 10 years...
“ Is the financial world even connected to the real world?”
Somebody tell this moron that Apple and Amazon and google etc are not financial companies...
The XLF is at 24 having previous to Covid high of 31 earlier this year... ie DOWN 20%.... and that is WITH the Fed lowering the risk free rate to 0.1%...
Boeing is STILL in the shitter...
JPM is at 96 previous high pre Covid of 141...,ie DOWN 30%... What was GDP DOWN?? 30% tell this moron.... somebody tell him...
Clueless Art degree liberal educated second rate intellect unqualified...
The financials are down EXACTLY WHAT GDP IS DOWN.... EXACTLY...
This guy should be banned....
“ A highly respected scholar who has studied crisis politics and economic ideas for the past 25 years, he has just published the book Angrynomics, in which he, along with his co-author, examines why many seem so angry these years.”
Yet he is continuously BEARISH ... oh yes a “highly respected scholar” who has been wrong the whole time...
The ONLY THING that causes prices to go down is POLICY...
Oh yes many of the perma bears are “angry” ... they can’t have any money left ... they CANT...
“San Francisco: Recent Footage“
The guy in the BMW is coming home from WORK...
The drug addicts on the sidewalk blocking it are narcotics addled pieces of human garbage who should be given a UBI after their heads are cracked WIDE open for loitering and shitting up the neighborhood...
They are you lefty douche bags idols...
Forget the JG for them they are of no material value.,, nobody wants to deal with them.,
In fact, they are of NEGATIVE VALUE because they are denigrating the community...
Just give them a UBI and healthcare and get them to disperse...
They are of zero redemption value... ZEEEEEEERRRROOOOOO.....
I don't have Frank Matto's way with words, so I'll stick to boring old normal English prose.
Isn't the explanation simply that the demand for safe assets / savings currently high relative to the supply? That also explains low interest rates.
The simple explanation, in keeping with MMT, is that setting base rates is an artificial interjection in the market that *lowers* asset prices below their market value.
All you are seeing now is the normalisation of 0% - all the way up the interest rate curve. And that naturally drives up the price of assets that have a chance of paying anything over 0%.
That will continue until government bonds disappears and banks over a full 0% liquidity overdraft at the central bank unencumbered by collateral.
What this is telling is that in a free market the return to capital is miniscule.
"ust give them a UBI and healthcare and get them to disperse..."
Why not simply execute them Matt and dispose of them quickly rather than waiting for them to die of the diseases of poverty and detachment?
Then society can be reserved for those who think themselves better than others.
As a retired doc I all along have believed that medicine would find our way out of this viral crisis. So not only did I stand pat with the stock market, I anticipated a huge over reaction and drop in the spring. With a great buy low opportunity forming. The drop we got was relatively meager, and today I still think downside risks to be be greater. But I also still think that we will be back on track within the 2 year time frame.
That will continue until government bonds disappears NeilW
Why should they when the inherently risk-free debt of a monetary sovereign can command negative returns? Returns that can fund, at least partly, an equal Citizen's Dividend?
and banks over a full 0% liquidity overdraft at the central bank unencumbered by collateral. ibid
More welfare for the banks, and by extension, for the rich, the most so-called credit worthy. Have you no shame, Neil, to be such a bank toadie? Or do YOU think bankers are a superior class to those they steal from?
Did Matt blow a gasket?
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