GUALFIN, ARGENTINA – Investors were cheered up last Friday by the jobs report, which showed that the number of new jobs is about equal to the high set back in 2006 – just before the last crisis.
As near as we can make out, it is just noise.
So let us continue with our description of the Great Mountebank Market of 1987–2018. It wasn’t… and isn’t… what investors thought.
Investors thought they were making money by funding America’s win-win industries. But they weren’t investors at all; they were speculators.
And they weren’t providing the capital for real growth and prosperity.
Instead, they were unwitting participants in the Fed’s flimflam, stealing money from the Main Street economy and transferring it to the moneyed Wall Street-oriented elites.
Super investor Warren Buffett has said many times that “you don’t make money by betting against American business.”
An old-timer warning would have been more appropriate: “Don’t fight the Fed.” For the last 30 years, the fix has been in.
It’s win-win that builds real wealth. But win-lose is what has been driving stock prices.
In 1971, the feds replaced the old dollar with the new dollar. Alike in every other respect to the old one, the new dollar had one critical difference: It had wings.
The old dollar was weighed down by gold. It could never get off the ground.
It was limited by time and resources. If you wanted more dollars, you had to earn them the old-fashioned way – by providing goods or services.
That was how the Main Street economy worked. It created wealth. And the people who created wealth earned dollars.
The old dollar helped make America the biggest exporter in the world, with an unbroken chain of export surpluses reaching back more than a hundred years.
But the new dollar could be gotten without satisfying a single customer. It was not earned on Main Street. Instead, it was created, by the credit industry, on Wall Street.