Why Stocks Have Risen: Stimulus, Stimulus, and Indefinite-Stimulus, i.e., Transfer of Wealth from Main Street to Wall Street

via chycho
wealth_distribution

Since bottoming out at an intra-day low of 6,467 on March 6, 2009, the Dow Jones Industrial Average (DOW) has risen to 15,295 as of May 23, 2013 – a gain of approximately 130% in just over 4 years. The S&P 500 has shown similar results, advancing from an intra-day low of 666 to 1,650 for the same period, a gain of approximately 125%. Stellar returns.

As to why the markets have risen at historic rates during times of austerity economics? The answer is simple, it’s due to quantitative easing (QE) began by centralized banks after the market crash of 2008 – “fundamentally a regressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy.”

The amount of stimulus used varies depending on your definition of stimulus, so we won’t bother keeping tabs on the trillions that have been dumped into the markets in the last 4 years. We’ll just make note that at present the Federal Reserve is continuing its unlimited quantitative easing program to the tune of $85 billion a month, a last resort, desperate measure that the FOMC began in 2012 to maintain its ‘growth’ targets.

As for the consequences of what is taking place, considering that “affluent households typically have their assets concentrated in stocks”, it’s a transfer of wealth from Main Street to Wall Street:

“In terms of types of financial wealth, the top one percent of households have 35% of all privately held stock, 64.4% of financial securities, and 62.4% of business equity. The top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.”

continued at: chycho

, , , , , , ,

  • Liam_McGonagle

    Saw this coming a mile away, but naively thought that Americans would have risen in revolt by now that they’ve seen the stock market has absolutely nothing to do with the real economy. I was actually happy when they announced QEII. I figured that was the 7th seal, so to speak.

    But somehow no one cares.

    • salviad

      That’s what’s caught me by surprise as well. I thought for sure Americans would start to do something to change this, but nothing. I had no idea how rooted they were in their apathy, or how disempowered they felt.

      • mannyfurious

        I think it has more to do with half of the people in this country blaming poor minority leeches and “teh gheys” for all of their problems instead of the people who are really behind it all.

        • Liam_McGonagle

          Yes, ultimately it really is a spiritual crisis.

          It took me a long time to realize that mankind’s mental faculties are, in fact, the least crucial of his endowments. People will simply use whatever intelligence they may possess to rationalize whichever position strikes their subjective fancy.

          Bottom line: Americans are perverts.

          • mannyfurious

            Americans ARE perverts. The way I look at is like this: A lot of people are miserable in their lives (i.e. the aforementioned “spiritual crisis) and so their thought process is something like the following: “I’m a fat fucking slob with a fat fucking wife, three whiny, demanding little shits who take all of my money and free time. My job sucks. My boss is an asshole. I’ve got a small penis. I’m not on TV. I don’t make enough money. I drive a big ass fucking truck that I can’t really afford. My house is too small and it smells like hogshit. My spoiled retard kids don’t know how to act so the evil, dumbshit teachers keep picking on them. I hate my life, but, hey…AT LEAST I’M NOT A FAGGOT OR A WETBACK OR A NIGGER OR A GODDAMNED PENCIL-NECKED, BLEEDING HEART LIBERAL.” etc.

          • Lookinfor Buford

            mannysconfused.. I am a slim male, 6′ tall (barefooted). My job is tedious but it pays for food. My wife is smoking hot. My kids are far less rebellious, more respectful, and more studious than I ever was. My penis is fine. TV is overrated. I drive a pretty big truck that is paid for in full. I actually put stuff in the back sometimes, like dirt. I wish I’d stuck to the smaller house cuz, well, hot, working women don’t like to clean (C’est la vie). My kids give their teachers a hard time, but I always side with the professor. My life is nowhere near perfect, but I am thankful for the opportunities that a free-and-just society has created, and thankful for my skills which allow me to feed my family and also have some fun. AND I WISH LIBERAL UTOPISTS WOULD STOP FUCKING SHIT UP AND BRAINWASHING PEOPLE, yes.

          • mannyfurious

            Damn, you are the fucking man. How do you even make it through the day with such an abundance of hetero-masculinity coursing through those veins? Is it hard to keep the women off ya? I bet it’s not as difficult as not jerking-off when you pass by a mirror.

            I’m so fucking jealous. I wish I were just as ‘Muricun as you…

        • salviad

          Brainwashing is the main culprit but I think people have to take responsibility, which is why I called it apathy – info is available online as to what the causes were, what to do about it, and how to build a better society – if only masses converted to interactive entertainment instead of a passive one. It’s coming, but it will take a few years and a lot of pain.

    • Juan

      “As flies to wonton boys are we to the gods.”
      -W.S.

    • Juan

      “As flies to wonton boys are we to the gods.”
      -W.S.

  • Lookinfor Buford

    It’s funny that you group-thinkers feel that way, and all just seem to agree on this fantasy perception of people who earn a good living. I happen to know 1000s of them personally, and none of those I know, are as you describe. Haters? Get real people. You fail to mention the 80% of Americans who are doing just fine despite not being 10%’ers, and that a percentage of the remaining 10% are disenfranchised because THEY were brainwashed into thinking the world owes them something. And, somehow, they are doing just fine nowadays, as well.

    • Jonas Planck

      You know thousands of wealthy people personally? I totally believe you. I bet you’re on a first-name basis with every last one of them, too.

      • Simon Valentine

        dude your name is awesome

        Buford Search has a cloud that’s kinda as-if a point that we could have this all be about. i’d say “Buford S. has a point” but it’s not accurate to say so in this case.

        it’s an important distinciton, declassification and re-juxtapositioning of “parameters” and “people”. i know it’s been said before (similar), but truth, authority, command, order, and value are willing to service and work with ANYONE. any person. any people. that said, people do not inherently ‘have’ or ‘own’ or .. whatever … such “parameters” as those. they are illusions. they morph. they’re just input boxes and output numbers in a programming code that ‘no one has’. the oracle machine, mebes. notice it’s the point that i did not say PEOPLE are willing to service and work with people … because that’s something entirely different than watching ‘metaphysical word fights gear up like it’s an episode of dragon ball ZZZZZZZZZZZZZZZZZZZZZ*9000*ZZZZZZZZZZZ

        *edit*
        the first move is the episode…
        NATURE VS NURTURE
        VERSUS
        PEOPLE ARE INHERENTLY GOOD
        wait that may be ichigo… damn…

        • Jonas Planck

          God help me, I think I understood most of that! You’re on a level where you understand that nothing actually “belongs” to anyone… however, this particular iteration of Buford appears to think that everything belongs to him. It’s like mixing oil and water. Whereas you understand the transitory nature of all things, and the absurdity of pigeonholing demographic groups to fit a false narrative, this particular Buford is mired in that false narrative, and will probably rely on that prejudice to underscore any argument he presents. Then again, he might not even be a real person. Astroturfers are getting pretty easy to spot these days: they tend to be fanatically devoted to the crap the corporate media spews.

          edit: this is just a hypothesis, mind you. The proof is in the testing.

          • Simon Valentine

            good call. “pigeonholing demographic groups to fit a false narrative”. damn glad to know i’m not the only one seeing that. thanks. cya around!

          • Lookinfor Buford

            How’s that Philosophy degree working out for you?

          • Simon Valentine

            sorry i’ll have to check the dean’s ledger
            …loading….
            alright, mister prezydent wunts 2 no iff it be a geometric angle, a location like longitude, or specifically a Cretan or Athenian? Pythagoras is no? or yes?

            you’re a .. man? .. for specifics
            please let’s share some in the next episode

            it’s been so long
            since i’ve been to Vegeta

            other than that, How! How stranger! a hi to you as well!

            far better than you’d .. allow? .. yourself to imagine. thanks for asking! the point is that i do hope there is something wrong connected to the statement, but it’s what we do and say otherwise that we’re here about, yes?

          • Lookinfor Buford

            Yes, I am man. No.. I think we’re here to disseminate ideology, in the hope that a stupid blog somehow matters. Must laugh at self.

            I do like your poetry. And I hope your life is as fulfilling. But, I think you should read the book about the rye. And no, I don’t claim to know you at all.

            p.s. Vegeta?

          • Simon Valentine

            catcher in the rye? heard many references to it, i have. have not at this moment read it. haven’t read Plato’s Knowledge either, though it was given me and i said i would :/

            oh i dunno Vegeta. father? son? planet? mostly a reference to Dragon Ball Z again. i only wish i was more familiarized with it than i am. i’m more familiar with the traveling salesman (problem).

            mathematics and computer science. philosophy and psychology did there damndest (don’t they usually do so? :/) do hitch right up next to my main focus. between them and a strict religious parent, my life is quite familiar with extremes of … well. that’s just where it lies most of the time :)

            stringent policy is wonderous for mathematical and logical study. not so much for philo or psych. but hey, combine the two and till the field…

    • Simon Valentine

      yeah, way to ignore the fact that you just defined one plateau, one class, one disc of the capital system. somehow the translation shut the fuck up doesn’t seem like something you’d abide by without … what? not telling others it was they who should stfu? or not realizing the fact that you just defined one plate…..

      you read like one of the pseudo normal people who work daily and expect that they’re immune from this or that, that they haven’t done a misdeed, but it’s just the same story as the stories go. capital.

      how many hertz is a conscience?

      thank you for posting.

      it has been a wonderful example of how people maintain a blind eye to their connections with goings-on while remaining steeped in their own opinions, which many of them entail as “someone else’s”. slaves and surfs to ideals of which they are not yet aware. whether it be a trinity system, a pentagon system, or any other clique system, the portention to truth, authority, command, order, and value remain – and remain willing to service and work with insignificant slaves. perhaps you miscomprehend neutrality. a common mistake.

      the world owes them something and if it’s not called potential energy, then it’s probably some stupid human idea, like punishment, praise, work, freedom … the ability to shut people the fuck up …

      and what their reactions may be …

      • Lookinfor Buford

        but you do claim to know me, eh?

        • Simon Valentine

          meh
          feinting is something i know
          it’s kind of a Sagittarius question?
          i distinctly recall activation of an area of memory (when reading your post the first time) having to do with (mostly) coworker (stuff).

          honestly, at this point, i know one thing, and it’s that i’d be comfortable enough to not give you an answer and see how accurate of an answer that (in and of itself?) is.

          apophatic natura?
          rad, maybe.
          did you know there are some people that truly believe or work or .. .whatever.. that r.a.d. is a ‘problem’, ‘disease’, ‘to be removed from people’? how strange.

    • alizardx

      Well played.

    • Noah_Nine

      I call bullshit… gated communities are spiritual and cultural ghettos…. the suburbs are a wasteland of the most dreary sort…

      • Lookinfor Buford

        Not mine.. We like to party

    • Lookinfor Buford

      A bunch of group thinking flamers, full of personal attacks to try and indoctrinate people into believing the system is a lot more fucked up than it is. All suffering under the exact illusion you try to assign to others, that you think you are engaging in independent thought, but are really just echoing the bogus ‘issues’ presented to you by the consciousness raisers of the world. Pathetic. Step into the real world hippies. Walk a mile in the working man’s shoes, who does not ask for more than what he has earned, simply because that is wrong. Those of you who are flat out commies with regard to private property can simply kiss Buford’s ass. I don’t believe in our Republic because anyone indoctrinated me to it.. I believe in it because my own rational reasoning and life experiences led me to understand that it is the best solution and least of all evils today, it works for me and many others, most who think it doesn’t work are simply lazy and impatient, and that if we become communists (which is what socialism is, minus the civil rights abuses), not only I, but the rest of the world will be worse off for it in the long run. Just try implementing communist solutions in an incubator and watch what happens. But I digress, we were talking about indoctrination. A stance on self-reliance is the pudding in which the proof resides. Anyone who fails to recognize Noam Chomsky’s description of the two dichotomous views in education today, and anyone who sides with his latter described group is either un-enlightened themselves, ignorant, or simply evil.

      • Andrew

        Double reverse psychological projection for the win!

    • Andrew

      Anyone can read the innumerable arguments in the comments sections on this website which give the lie to your “group-thinkers” attack.

      • Lookinfor Buford

        By all means, share it with us here.

        • Andrew

          It? There are many, in at least a third of the articles.

          • Lookinfor Buford

            Share one.

          • Ted Heistman

            I think laborers in the US get the shaft. Its not even the most favorable climate for starting a small business, here. But still, yeah, I support the entrepreneurial spirit. Its alive and well, especially in places like Singapore.

          • Lookinfor Buford

            Whether they get the shaft or not is not the point. They have a choice, and gobs of opportunity to change their situation. Small business is stymied because the people have given the govt right of way to over-interfere, incorrectly thinking this will improve the situation. When they see the cluster-fuck they’ve created, they blindly cry ‘the whole thing’s broken’, and start quoting a bunch of shit they learned in philo-101, while they were getting their useless degrees in Philosophy. Don’t get me wrong, I love philosophy.

          • Ted Heistman

            Yeah, if they don’t like working at Burger kind they can always go work at Walmart.

          • Lookinfor Buford

            And here I thought we had a thinker. Right on with your false dichotomy bro. Keep on putting it out there and someone’s bound to believe it

          • Ted Heistman

            Dude, I’m just playing with you! The individual always has a choice. But that is not to say large numbers of people aren’t getting the shaft. You know, if wages stagnate and most jobs are in the service industry that means that most people are going to have shitty jobs, shittier than most of the jobs people in the US used to have. That means the country is changing for the worse.

            That’s not to say I personally can’t be successful by being self actualizing, but if I can I would like to do my part for my country not to continue on a course of suckitude.

          • Lookinfor Buford

            Well we’d all love to hear the solution, just as long as it’s not, ‘larger government, more socialism, and more group-think as fact’. As long as it’s not, ‘let’s do it the way the rest of the fucked up world is doing it.. maybe that’ll work’. Too high a price to pay just to save people from having to work hard and put in their time. Not to mention a ridiculous proposition to begin with. Don’t get me wrong. I love the rest of the world.

          • Ted Heistman

            I think we should get rid of the Federal Reserve and the IRS and then the big Government Contractors would no longer have a trough to feed on. That’s a solution I see on a collective level.

            I don’t see it happening though.

          • Lookinfor Buford

            It may happen to the Fed by default.. bah dum bum!

          • Andrew
      • Lookinfor Buford

        Share one.

  • Lookinfor Buford

    FTA – One thing to keep in mind, this transfer of wealth is not just a U.S. phenomenon, it’s occurring across the globe (see below).

    • alizardx

      Look at Greece and “austerity” as an example.

  • BuzzCoastin

    the stock market is not an economic indicator
    it’s a meme used in news stories about financial psyops

    a 130% gain in 4 years is simply the market keeping up with inflation
    that
    and the huge slush fund of 401K and retirement funds
    corporate profits and government slush funds
    that have to be parked somewhere reasonably safe (controllable)

    the rich don’t know what to do with all their excess money
    that they stole from the others
    because they’re not any brighter than the people they stole it from
    just better placed for the receipt of money

  • BuzzCoastin

    BTW: wealth is not money, stocks or investments

    wealth is the ability to do whatever you what to do
    whenever you want to
    it has nothing to do with possessions
    it has everything to do with being free

    • Noah_Nine

      by those standards I am a pauper… More autonomy NOW dammit!

  • Dingbert

    The definition of stimulus isn’t a mystery. Stimulus is counter-cyclical policy. Monetary policy is only part of that, and QE is only a novel part of monetary policy. Manipulating interest rates is stimulus. Tax cuts are stimulus. Deficit spending is stimulus. You get the idea. We know from historical data that these traditional stimulus measures usually work. But we’re not really using any of them. QE is very new and risky. We are keeping interests rates artificially low, but not like others have (Sweden’s central bank set a negative interest rate in 2009). We raised taxes this year and cut spending. Yet, somehow, we say the government is engaged in “stimulus,” while it does the precise opposite!

    Is this because central banks responsible for monetary policy have plenty of freedom to operate, while the legislative arenas responsible for fiscal policy are stagnant and politicized? Or is it actually intentionally regressive, due to powerful NGOs able to manipulate both?

    I don’t know, but it will be a miracle if it works.

  • jgalt63

    Subversion of the Republic, regardless of ‘party’. The Papal Money Cartel, seeding the debt bombs among their targets, and then their servants in Govt. enabling further targeting of surviving US institutions and financial health via their ‘oversight’.

    Curious, the amount of performing loans and the savings of millions in the anti-Divine Rights uSa disappearing into that Papal maw…largely without any awareness of it by ‘media’ or common Americans.

  • Roger Mexico

    Yeah, stimulus and austerity are effectively opposite policies.

    Stimulus (tax cuts and so forth) aim to increase the money supply, encourage consumer spending, and thereby promote economic growth.

    Austerity (spending cuts and so forth) aims to reduce the money supply, thereby reducing consumer spending, and is generally used to reduce inflation. (Or clear government debt, but it often doesn’t work so well at actually doing that given the economic effects–in actual economic theory it’s a policy that serves to reduce demand and hence reduce inflation)

    QE is a stimulus policy. “Sequestration” is an austerity policy. Kind of moronic to be doing both at the same time, but you know, whatever. Let’s at least get our terminology straight if we plan to have any kind of meaningful discussion about economic policy.

21