The Big Lie. Stocks are up, so the economy must be better
Posted By RichC on August 4, 2014
While reading President Obama’s comments in The Economist, the same class-warfare ire continues to be flamed for those who believe those living in the United States are against each other: Poor vs. wealthy, CEO vs. employee, ambitious vs. entitled, black vs. white, Democrat vs. Republican, etc. Isn’t it possible that those 
CEOs and corporations being derided are just as patriotic as President Obama and want to see the U.S. adopt policies that grow the entire country, not just their own wealth? After all, we universally accept that our democracy see capitalism as the engine which powered our nation to superpower status and a model for democracies everywhere. It enabled every citizen to have a quality of life far better that generations before them and arguably better than any nation in the world. It is more likely that President Obama recognizes that for Democrats to maintain power, they must split the country. They are rely on the “piece of the pie” analogy and attempt to convince the nation that there is only ONE pie and everyone deserve their “fair share” (and see it as their job to decide what is fair).
Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
~ Winston Churchill
If you are of that mindset … then for a moment, consider the possibility that Americans can make more pies rather than splitting up a single pie with more and more people.
Entrepreneurs given the proper incentives (or just removing the disincentives!) are capable of creating an infinite number of pies. Why not endorse policies which encourage innovation and business growth (more jobs) which would competitively increase wages especially for the innovative, brightest and hardest working – something to be encouraged not discouraged. Americans for the most part are ambitious and don’t want to be dependent on charity or government entitlements … they want a decent wage, a good job and an optimistic future.
The New York Times also recently published datapoints post focused on wealth disparity (surprise, surprise). While their focus was on the growing gap between the “haves and the have nots,” they don’t address the unintended consequences to the Federal Reserve’s easy money policy that floods banks with cheap capital. Obviously the Fed’s intent is stimulate business investment and hiring in order to rejuvenate our economy … BUT their policy can’t address the onerous regulations, taxes and deterrents U.S. companies face under the Obama administration. One would think the administration, congress and the Fed could get on the same page when it comes to “growing” our economy and benefiting all Americans?
As author of the Aftershock Investor, Robert Wiedermer, comments when looking at what the Federal Reserve policies do:
Think about it: Who owns most of their wealth in their personal home and who owns most of it in common stocks? For the median-income earner who has a modest home and few, if any, stock investments, the Fed’s wide-open money printing policy has been meaningless
…That median household is the heart of our economy. The richest 5 percent or 1 percent or what-have-you simply cannot drive the whole U.S. economy forward. They can only buy so many houses, take so many vacations, purchase so many cars.
Long-term unemployment, meanwhile, is still a huge problem in this country, and that shows up in this study. Out of all the unemployed, those out of a job for more than 27 weeks are still about one-in-three. That’s twice as bad as the last huge, long recession in this country, back in the early to mid-1980s.
…The result has been steadily inflating asset values and a lulled sense of complacency about our economic future, even though the underlying fact of the matter is that the average American is in far, far worse shape — and facing a 36 percent decline in net worth!
While the media would love for you to think of this as a matter of richer people stealing wealth from poorer, the fact is that even the rich are living on borrowed money. The Fed will keep right on printing, however, and print much, much more, until things ultimately blow up.
Meanwhile, our economy is still quite sick. It’s very likely that the growth we’ve seen recently will slow as more Americans begin to face up to the reality of a permanently lower net worth and permanently reduced incomes.
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