Today was the day that Quantitative Easing by the Federal Reserve was going to start to be reduced, or so the markets thought. Instead, the avalanche of cash that the Fed has been tossing into the economy each month will not be reduced because the Board of Governors of the Fed think that the American economy is too fragile to survive any reduction in stimulus. Think about that. Five years after the crash, after trillions of dollars of additional spending and trillions of dollars of cash pouring out of the Fed to help spur the economy, it is just too fragile to survive any reduction of this stimulus. In other words, all of the policies put in place by president Obama have failed to get America out of an economic rut. We still do not even have as many people with jobs as there were five years ago before the recession. Not since the Great Depression has there been any economic slowdown in America which lasted like this. The Fed today is telling us that things are really still quite bad.
So what is the reaction of the stock market to the news? Why the indices have all soared as if they were jet propelled. It is just wonderful news in the eyes of those who invest in stock. The bad news for the economy is good news for the stock market.
Now let's be clear: no one investing in the stock market wants to see the American economy do poorly (at least no sane person). The reason for the exuberant reaction to the Fed's announcement is the same reason why the stimulus from the Fed and the federal spending increases do not help the economy in general. Simply put, the policy of the Fed combined with the spending and regulatory policies of the Obama administration are designed to help only the very rich. The people who have the assets to speculate in the stock or commodities markets get easy, low-cost cash to buy more and more of these investments, thus driving up prices. That price increase does not do anything for the average family on Main Street. Oh, maybe it helps them if they still have a retirement account, but it surely does nothing for their current income. It does not help them buy new homes or new cars. It does not help them with the back-to-school spending. But the ultra-rich who already have enough money to spend are making a mint off these policies. And, as we all know, there are not enough rich people to drive the economy forward very fast. There is a limit as to how much these people will spend.
These crazy policies that help only those who are already wealthy seem to spew out of the Obama White House like sewage out of a broken sewer pipe. Think about all those "green energy" initiatives that Obama put in place. There were quite a few cronies of the president who got rich or richer when their companies like Solyndra got hundreds of millions from the federal government for projects that made no economic sense. Despite all the touting of how many jobs were to be created, nearly all of those supposed jobs are no longer there. The costs of electricity, however, were jacked up when the feds put in regulations that forced all sorts of low cost energy plants powered by coal to close. So that family on Main Street pays more each month for its electric bill, while some rich and politically connected bigwig gets a huge payoff out of federal money.
The saddest part of all this is that most people in America do not understand what has been happening. Obama talks and talks and talks and talks about helping the middle class. What Obama does, however, just digs the hole deeper and deeper to the point that most in the middle class will never be able to get out of that hole. People have to start paying attention to what actually happens and not what is said about it. Remember the old adage "Actions speak louder than words." It's true, and it's time to look at the actions of those in power.
So what is the reaction of the stock market to the news? Why the indices have all soared as if they were jet propelled. It is just wonderful news in the eyes of those who invest in stock. The bad news for the economy is good news for the stock market.
Now let's be clear: no one investing in the stock market wants to see the American economy do poorly (at least no sane person). The reason for the exuberant reaction to the Fed's announcement is the same reason why the stimulus from the Fed and the federal spending increases do not help the economy in general. Simply put, the policy of the Fed combined with the spending and regulatory policies of the Obama administration are designed to help only the very rich. The people who have the assets to speculate in the stock or commodities markets get easy, low-cost cash to buy more and more of these investments, thus driving up prices. That price increase does not do anything for the average family on Main Street. Oh, maybe it helps them if they still have a retirement account, but it surely does nothing for their current income. It does not help them buy new homes or new cars. It does not help them with the back-to-school spending. But the ultra-rich who already have enough money to spend are making a mint off these policies. And, as we all know, there are not enough rich people to drive the economy forward very fast. There is a limit as to how much these people will spend.
These crazy policies that help only those who are already wealthy seem to spew out of the Obama White House like sewage out of a broken sewer pipe. Think about all those "green energy" initiatives that Obama put in place. There were quite a few cronies of the president who got rich or richer when their companies like Solyndra got hundreds of millions from the federal government for projects that made no economic sense. Despite all the touting of how many jobs were to be created, nearly all of those supposed jobs are no longer there. The costs of electricity, however, were jacked up when the feds put in regulations that forced all sorts of low cost energy plants powered by coal to close. So that family on Main Street pays more each month for its electric bill, while some rich and politically connected bigwig gets a huge payoff out of federal money.
The saddest part of all this is that most people in America do not understand what has been happening. Obama talks and talks and talks and talks about helping the middle class. What Obama does, however, just digs the hole deeper and deeper to the point that most in the middle class will never be able to get out of that hole. People have to start paying attention to what actually happens and not what is said about it. Remember the old adage "Actions speak louder than words." It's true, and it's time to look at the actions of those in power.
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