The rise is the Dow Jones Industrial Average to over 14,000 is a fake recovery. I say fake because nothing has changed in terms of economic policy from the United States Federal government. They continue to obstruct production, favor their corporate buddies, and tax the rest of us. They also continue their stupidly excessive regulations and anti-free market financial policies. On top of that, they have racked up over 16 trillion in debt.
I know, I’m offering no concrete evidence that the recovery is fake. I’m no economist nor am I really good at keeping track of these things. What I do know is that the Dow Jones Industrial Average is a calculation based on the top 30 companies. And here is my theory, for what it’s worth.
All of these 30 companies have gold member status when it comes to financial investments. In other words, they are given huge loans at much lower interest rates than other companies because they are, after all, in the top 30. Now, not all of these companies will take out large loans to expand their businesses (I’ve heard Microsoft has no debt). Even so, the ones that do would benefit from the new, freshly printed money from the Federal Reserve.
Well, not the printed money per se, but digital increases in the bank reserves. With the Federal Reserve interest rates at near zero, you can bet that the top companies get the prime pick of the loans that are handed out. And so that money trickles down the hierarchy to us where it becomes devalued and largely worthless in comparison to when it was first issued.
I could be wrong about all this. I hope I am. I don’t want our country’s economic prosperity to be fake because all of us have a vested interest in a much more productive and wealthy country. But the reality this all may just be setting the stage for another large collapse.