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Stock Market Irrelevance

10 Sep

[courtesy Google Images]

[courtesy Google Images]

After WWII, Americans increasingly invested in the stock markets. As a result, the American people came to view the stock market indices (DOW, S&P 500, NYSE, etc.) as reliable indicators of the health of our economy and even the value of the US dollar.

However, the Dow Jones fell 50% in the first 18 months after the onset of the Great Recession of A.D. 2008. This fall destroyed so much paper wealth and so much of the average American’s hope to profit from stocks, that large numbers of ordinary Americans began to lose confidence in, and drop out of, the stock market.

Several recent news reports verify this withdrawal and suggest some intriguing questions:

•  First, The Washington Times (“Fed: Under Obama, only the richest 10 percent saw incomes rise”) reports that,

 

“Under President Obama, the richest 10 percent were the only income group of Americans to see their median incomes rise, according to a survey released this week by the Federal Reserve.”

 

It strikes me as surprising, even strange, that the Federal Reserve would issue a report that (as you’ll read) would be so critical towards President Obama. This public criticism suggests that there may be a significant but secret animosity between the Federal Reserve and President Obama.

 

“The Fed data covered the years 2010-2013, during which period Mr. Obama constantly campaigned against income inequality and won re-election by painting his Republican rival as a tool of Wall Street plutocrats.”

 

No doubt that Republican Party leaders are the tools of the Wall Street plutocrats.

The questions, however are: 1) is Obama is also a plutocratic “tool”?; and/or 2) are the Democrat Party leaders also plutocratic “tools”?

I’m no fan of Obama, but I doubt that it’s fair to blame Obama for the rising income of the rich. I believe it’s probably more reasonable to place primary blame for income disparity on the Congress—including both Republicans and Democrats who compete for the plutocrats’ favor and political-campaign-contributions/bribes.

Obama may or may not be secretly favoring the rich. But, even if he was, I doubt that Obama, by himself, could cause the kind of legislation and economic conditions that so favor the rich. Obama may contribute to the problem, but the primary cause of the problem is political campaign contribution laws that allow Congress to legally accept bribes from the rich under the guise of political campaign contributions.

 

“‘Data from the 2013 Survey of Consumer Finances confirm that the shares of income and wealth held by affluent families are at modern historically high levels,’ the report said in noting that the median income fell for every 10-percent grouping except the most affluent 10 percent.

“The 2010-2013 SCF found that even though real gross domestic product [allegedly] grew by 2.1 percent and civilian unemployment [allegedly] fell from 9.9 percent to 7.5 percent, only families at ‘the very top of the income distribution saw widespread income gains,’ . . . .

“The report comes just a week after AFL-CIO President Richard Trumka said the union group would not endorse any more Democrats that following President Obama’s economic policy.”

 

If only the rich are getting richer and the middle class are ceasing to exist and poor are getting poorer, who do you suppose is investing in the stock markets?

The poor never invested in the stock markets. The middle class used to invest until they lost 50% of their savings after A.D. 2008. So, the only people who might tend to invest in the stock markets are the rich.

Other than that, stock market investors must be increasingly composed of major financial institutions.

Insofar as investments by people in stocks are diminishing, can the stock markets still function as a reliable measure of the strength of the US economy?

 

•  Second, ZeroHedge.com (“What’s The Point Of Hiding It Any Longer?”) reports that according to the Chicago Mercantile Exchange’s (CME’s) A.D. 2012 10-K annual report, the CME’s “customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers and governments.”

However, one year later, the CME reported in their A.D. 2013 10-K annual report that their “customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments and central banks.”

Thus, central banks (not only the Federal Reserve, but also foreign central banks like the ECB, etc.) are now openly influencing, controlling and manipulating prices the prices of stocks and commodities.

Think about that.

What would the centrally banks’ primary interest be in manipulating US markets?

Well, what’s the primary product for all central banks?

A: fiat currencies.

What’s a, perhaps the, primary threat to fiat currencies’ survival?

A: the price of gold.

It follows that the principle enemy of the prices of physical gold and silver must be the world’s central banks. Not Wall Street. Wall Street may act on behalf of the world’s central banks to suppress the price of gold—but gold’s primary adversary must be the world’s central banks, acting in concert to sustain fiat currencies by suppressing the prices of physical gold and silver.

 

•ZeroHedge.com has also alleged that “Cluster of Central Banks have Secretly Invested $27 Trillion in the Market”. ZeroHedge also asks,

 

“. . . why even pretend there is a “market”? Within the “market” (and by “market” we mean stocks) it has long been known that central banks actively trade bonds, FX and commodities—and market prices are whatever central banks say they are.”

 

This is more evidence that 1) our “free markets” are actually rigged; 2) the major investors are financial institutions; and 3) public participation in the markets by real people is decreasing.

Insofar as the markets are rigged and public participation is diminishing, can stock market indices still be regarded ask accurate indicators of our economy’s strength and future? If not, are stock market indices still relevant to the average American?

 

•  ZeroHedge.com also reported (“CNBC Viewership Plunges To 21 Year Lows”) that:

 

“It’s over: whether due to the complete domination of centrally-planned markets by a few central banks, whether as a result of High Frequency Trading computers forcing out all human traders and investors, whether due to volatility plunging to record lows and complacency at record highs, whether viewers simply aren’t impressed by the new young, female faces that are increasingly taking over the primetime financial TV slots, because people are tired of Cramer’s endless “caffeine” high and endless attempts to justify a record disconnect between manipulated record-high “markets” and a stagnant economy in which some 53 million workers are “freelancers,” or simply because video game consoles don’t watch TV, America’s interest with finance and the stock market is over.”

 

ZeroHedge implies that there is no longer a compelling reason for 90% of the American people to invest in rigged stock markets or to even pay much attention to rigged stock market indices. These rigged indices may reveal quite a lot of information for or about the wealthiest 10% of Americans—but those indices are increasingly irrelevant to the remaining 90%.

Which raises several additional questions:

  1. If the Public has lost interest in stock market indices, then it follows that the public isn’t buying most of the stocks on the stock market. If the public isn’t buying, who is?
  2. If the public has lost interest the stock market indexes and the public isn’t buying most of the stocks being sold, how much longer can the public be fooled into believing that the stock market indexes are a reliable indication of the US economy’s strength?
  3. What happens if the vast majority of people stop placing much value on the stock market indexes?   What new economic indicator(s could take the place of the stock markets? Any?
  4. If the current stock market indices are losing their power of manipulate public opinion concerning the economy, and if no new indices are available to replace them, are the gov-co and Federal Reserve nearing a time when they will have no more illusions able to control public perception of the economy?
  5. Are we heading toward a moment when the government loses the means to lie effectively about our economy> Are we headed towards a moment of truth?
  6. Can the current government survive if it’s forced to tell the truth?
 

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5 responses to “Stock Market Irrelevance

  1. charles

    September 10, 2014 at 4:54 PM

    The most important questions are 4, 5, and 6. To quote Henry Ford, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

     
  2. Toland

    September 10, 2014 at 6:42 PM

    Over half of the American population is invested in the stock market – about the same percentage as during the dotcom days of the late 1990s.

    So if ZeroHedge is claiming stock market irrelevance, I’d say ZeroHedge is what’s irrelevant, not the stock market.

     
  3. Adask

    September 10, 2014 at 6:45 PM

    ZeroHedge isn’t making that claim. I’m reading ZeroHedge’s info as implying that claim. Technically, the claim is mine.

     
  4. moon

    September 10, 2014 at 10:20 PM

    Apparently, the stock market is totally irrelevant to me. At first reading of your post, my thought was to question this statement: “However, the Dow Jones fell 50% in the first 18 months after the onset of the Great Recession of A.D. 2008.” Then, i checked a chart and 50% nails it. Guess it wasn’t relevant to me then and it certainly isn’t relevant now.

    Toland, are you among the invested over half of the population – about the same as the dotcom days? Some of those dotcom folks are still trying to get back to where they were before the dotcom bubble and subsequent crash…i know some of them. Hope you won’t let your mouth overload your ass.

     
  5. Peter

    September 13, 2014 at 2:42 PM

    go to any search engine on the WWW and search “S&P 500 Index- MEGAPHONE TOP FORMATION” you will be amazed at what you find. When this thing rolls over watchout!

     

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