Is the stock market a sham for the middle class? Retail investors expected to pull out $475 billion in funds. Volatility index under pricing real risks.
The stock market is largely a source of entertainment or awe for most Americans instead of being a true source of wealth. In the United States roughly 42 percent of all financial wealth is aggregated with one percent of the population. One third of Americans have no savings at all so for this group, the stock market does not even enter the equation. Yet the stock market itself is now inching closer to record levels. Even volatility is abnormally low given that we barely avoided the fiscal cliff and are dealing with debt ceiling challenges once again. The stock market would signify that the American economy is doing fantastic. In reality, many people are still struggling and many organizations used the recession as a period to cut jobs and slash costs. The economy is still short four million jobs from the peak reached a few years ago yet here we are, with the stock market up over 100+ percent from the March 2009 lows. Is the stock market a sham for the middle class?
Federal Reserve bubble escape clause: The master of bubble creation talks about preventing future bubbles and other circular banking logic. Fed aggressively buying securities outright.
It is no secret that the Federal Reserve is aggressively buying up a variety of securities and storing them in their opaque balance sheet. The Fed in essence has become the bad bank and has served as the conduit to support bad banking policy. There seems to be a policy of slowly shrinking the middle class and over time, maybe people will not notice it. How can you not see that the central bank of the United States has been at the nucleus of many of the previous bubbles? So with that said, I found it rich that the Fed has talked about its ability to moderate bubbles. That is right. The Fed, the numero uno culprit in the housing bubble is talking about preventing future bubbles. Ironically by going deep into QE3 they are essentially inflating asset prices yet again by destroying fixed income investments and causing inflation to pick back up.
US median household income trap: Four decades of data and households struggling to keep up with inflation. Younger Americans face bigger income struggles.
Household income growth in the US has largely been absent for well over a decade if we adjust for inflation. This is important because people truly care about what their money can purchase. What use is it getting a $1 raise if healthcare went up $2? What use is it that you are earning $1,000 more a year when sending your kids to college now costs $5,000 a year more? It is unfortunate so little attention is given to income growth when the available data is readily available. Part of the lack of coverage probably stems from the reality that the mainstream press is largely an advertising vehicle.  Do not hold your breath for deep analysis and reporting from the press. Telling people how their inflation adjusted incomes are back to 1990s levels isn’t going to encourage people to go out and buy that new car, fancy tech gadget, or go into heavy debt for that new home. Let us dive deep into the income data.
Sequestering the working and middle class – The implications of runaway debt. GDP at record levels yet nonfarm employment is 4 million below previous peak. Trillion dollar coins. Greece unemployment reaches a new record.
Gear up those printing presses. You might be thinking that some of the policy talk coming out today is from The Onion but no, the idea of a $1 trillion coin is being discussed. The Federal Reserve is already very willing to become a shadow bad bank and take on all the questionable assets from the latest bubble from member banks. As the middle class is crushed, our nation is becoming more polarized. You have a massively large group of people that are now classified as poor in the world’s wealthiest nation. We have over 47 million Americans on food stamps. The average per capita pay is $26,000 much to the surprise of many people conditioned on only getting their data from the mainstream press. Those that deny inflation are not looking hard enough. The purchasing power for working and middle class Americans is being slowly destroyed. Europe is still facing major headwinds with Greece reaching a troubling new record with their unemployment rate. All this rhetoric means the Fed and ECB will continue on their path of quantitative easing and digital money printing.