Stock Market and Bond Market: It’s the Bond Market That tells the Truth

As a lonely voice in the wind I have been saying with only a few other analysts, that we never recovered from the 2008 recession and that the stock market indexes have been used to hide that fact. The Dow Jones Industrial Average is NOT an indication of our true economic status or growth. It went up 80% from early 2016 to early 2020. No economy in the world had that kind of growth over 4 years.

Our economy has shifted from real products and services to fake reporting. “Financial services” grew from 16% to 48% of GDP over a 40 year period. That means that goods and services generally shrank from 84% to 52%. The rest is mostly fluff produced by fake transactions on Wall Street.

The plain truth is that stocks should never have been priced as high as they were. This wasn’t irrational exuberance. It was intentional policy to encourage demand for buying stocks even though there was no economic reason to do so. Tax breaks for corporations resulted in companies pending hundreds of billions of dollars buying their own shares, driving prices up and creating the illusion of rising earnings per share. Free money from the Fed did the same thing.

I’m not predicting what happens next simply because there are forces and people scrambling to continue the illusion of a strong economy — while most people have no savings and are living paycheck to paycheck mired in debt with expenses piling up that didn’t exist before.

A truly strong economy would have minimum wage at least at $23 or more just to equal the minimum wage when it was first passed, adjusted for inflation. That would mean more people with more discretionary money to spend in a consumer driven economy. A high tide lifts all boats. A higher minimum wage results in higher wages for everyone.

While stocks are tumbling the bond market has been showing the analysis of investors who look at fundamentals — i.e., the ones who look at the steak and not just the sizzle. Interest rates have been kept artificially low despite the reports that the economy is growing. That has never made any sense. Long term government bonds are barely above 1% and might even go negative (you pay to keep your money safe).

The bond market isn’t merely reacting to the coronavirus: It is reflecting a perception that the global economy was vulnerable long before the disease emerged, because financial markets have never fully recovered from the last financial crisis.

The bond market has been conveying truly disturbing messages, not just about the current state of the economy but about the world’s inability to recover entirely from the last recession and our vulnerability when the next one comes.


All of this is traced to one simple fact — the securities brokerage firms calling themselves “Investment Banks” robbed the world economies of more money than even existed. We never recovered because we decided not to claw the money back. This basic error, which manifested in part in illegal foreclosures, is at the root of what could be a truly great economy for everyone. Allowing the continued trafficking in financial weapons of mass destruction is just plain stupid.

The answer is political. Most people in power are there because the Wall Street “Banks” paid for them to get in office. To restore order we need to dump the current slate of politicians and bring in new people who have no interest in devoting precious national resources to propping up a corrupt group of bankers on Wall Street.

Contrary to the bank narrative this does not mean destroying Wall Street. It means destroying those who abused it.

4 Responses

  1. What the heck did Obama do? And Holder? And Pelosi? And Hank? And Bernanke? And Geithner? And Barney? And Biden V.P running for President? Mr. BIden – you were known as the Senator from “MBNA” n/k/a as BofA. Lets talk about that.

    And Trump wants to go back to the fraud?. And our option is Sanders? – I have Republican values. But, Mr. Sanders is perhaps only one to at least say STOP. He may be going down bad path with Socialism — but a touch of truth may be what we need. But why is he not addressing?
    Does he know – it can’t be fixed?

    Warren? There was hope for you. But you failed. CFPB? They conceal. And, you just didn’t come forward on this enough.

    We are being controlled. All being concealed. Join together. Only chance we have. DO it NOW – before election. Should have joined together a long time ago. Let it flow – NOW. Join together. Get to media whatever way we can.

    The financial crisis was the biggest fraud upon the American public. All concealed. Obama — you failed us. You failed the American people. Biden – you knew.


  2. John Bonham….stay in your home…

  3. Hey all: check out the YES Magazine for Spring 2020..great stuff in there. THE WORLD WE WANT. 5 visions for a just, sustainable, compassionate future.

  4. Very interesting. These are the same cast of characters as in my case. While I remain vigilant at attempting to unwind an unlawful trustee sale and foreclosure, my family and I have to live with an ongoing threat of removal from the property while absent admissible evidence of a lawful transaction.

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