[rad-green] The Fed, the Virus, and Inequality: A global Dr. Frankenstein at work -- former Wall Street executive Nomi Prins

This is a multi-part message in MIME format...

------------=_1584052903-7785-112520
Content-Type: multipart/alternative; boundary="0000000000007b75b605a0b00ddb"

--0000000000007b75b605a0b00ddb
Content-Type: text/plain; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable

*https://www.commondreams.org/views/2020/03/12/fed-virus-and-inequality
<https://www.commondreams.org/views/2020/03/12/fed-virus-and-inequality>Com=
mon
Dreams          March 12, 2020The Fed, the Virus, and InequalityA global
Dr. Frankenstein at work.by Nomi Prins*

[image: What happens when serious trouble builds requiring something other
than the ability of central banks to combat it with more cheap money? The
answer could be a massive, even historic, stock market crash. (Photo: Scott
Beale on Flickr)]

*What happens when serious trouble builds requiring something other than
the ability of central banks to combat it with more cheap money? The answer
could be a massive, even historic, stock market crash. (Photo: Scott Beale
on Flickr)*

Whether you=E2=80=99re invested in the stock market or not, you=E2=80=99ve =
likely noticed
that it=E2=80=99s been on a roller coaster lately. The White House and most=
 of the
D.C. Beltway crowd tend to equate the performance of the stock market with
that of the broader economy. To President Trump=E2=80=99s extreme chagrin, =
$3.18
trillion
<https://www.cnbc.com/2020/02/28/us-stocks-erase-3point18-trillion-in-value=
-this-week-amid-coronavirus-tailspin.html>
in
stock market value vaporized during the last week of February. Stock
markets around the world also fell dramatically. When all was said and
done, $6 trillion
<https://www.reuters.com/article/us-china-health-markets-global/going-viral=
-six-charts-and-the-6-trillion-loss-idUSKCN20M2F6>
had
been at least temporarily erased from them. It was the worst week
<https://nypost.com/2020/02/28/us-stocks-continue-tumbling-from-coronavirus=
-panic-as-global-losses-hit-5t/>
for
the markets since the financial crisis of 2008 and it would only get worse
from there.

In the wake of that, the Federal Reserve kicked into gear. By the first
week of March, after high-level coordination among the Group of Seven (G-7)
countries and their financial elites, the Fed acted as it largely had since
the financial crisis, but with more intensity, giving the markets a brief
shot in the arm.

In a move that Wall Street and the White House had clamored for, the Fed cut
<https://finance.yahoo.com/news/fed-cuts-rates-by-50-basis-points-amid-coro=
navirus-concerns-150008506.html>
the
level of interest rates by half a percentage point. The markets reacted by
doing exactly the opposite of what the Fed hoped and, after having briefly
soared, the Dow then tanked nearly 1,000
<https://www.cnn.com/2020/03/03/investing/dow-stock-market-today/index.html>
points
that day. The next day, it rose 1,173 points (also partially attributed to
Wall Street=E2=80=99s embrace of Joe Biden=E2=80=99s Super Tuesday results)=
, only to plunge
again soon after.  Then, this Monday, within a few minutes of opening, the
markets dropped more than 7%
<https://www.npr.org/2020/03/09/813619387/dow-dives-1-900-points-nyse-halts=
-trading-as-stock-indexes-plummet>,
triggering a halt in trading.

Dizzy yet? Okay. Let=E2=80=99s take a step back.

Wall Street doesn=E2=80=99t like uncertainty. Worries about the outbreak of=
, and
economic fallout from, the coronavirus have stoked fears globally, only
compounded by the start of an oil-price war
<https://finance.yahoo.com/news/stock-market-news-live-stock-oil-futures-cr=
ater-on-coronavirus-crude-war-fears-224253935.html>.
Big Finance doesn=E2=80=99t deal well when its money is on the line. What=
=E2=80=99s
referred to as a liquidity shortage (or lack of free-flowing money) is Wall
Street=E2=80=99s deepest fear. That=E2=80=99s what happened during the fina=
ncial crisis of
2008. Under those circumstances, banks stop lending=E2=80=94both to each ot=
her, to
corporations, and to real people=E2=80=94and look to external forces like i=
ts "lender
of last resort
<https://www.federalreserve.gov/newsevents/speech/fischer20160210a.htm>,"
the Federal Reserve, and to the government to bail them out.

That=E2=80=99s why what=E2=80=99s transpired with the coronavirus is so ill=
uminating. It=E2=80=99s
not like the financial crisis, but central bank reactions are similar.
There is a known chain of events that underscores the transmission of
diseases: close contact, shared food, a stray cough or sneeze. What=E2=80=
=99s
unknown with a novel virus is how long and far and deep that transmission
will go into any society, how it might still mutate, and how disastrous=E2=
=80=94as
in the case of the Spanish Flu
<https://www.washingtonpost.com/history/2020/02/29/1918-flu-coronavirus-tru=
mp/>
of
1918=E2=80=94the consequences could be.

On our globalized planet, the constant movement of people across borders
has made the world smaller and more connected than ever. This means that
it=E2=80=99s made diseases ever more communicable and its ability to throw =
a monkey
wrench into a globalized economic system and financial markets so much
greater. People of various ages from varied cultures, religions, and
economic statuses have the ability to intermingle in transit, whether at an
airport, in a grocery store, or on a subway platform.

Several passengers with the coronavirus, initially confined to a cruise
ship off the coast of Japan, for instance, led to fatalities
<https://www.reuters.com/article/us-china-health-australia/australias-first=
-coronavirus-death-confirmed-as-former-diamond-cruise-passenger-idUSKBN20O1=
7A>
and
contagion elsewhere and were among the many catalysts in the spread of that
disease and of associated economic problems
<https://www.cnn.com/2020/02/28/business/global-tourism-novel-coronavirus/i=
ndex.html>
to
a distinctly globalized and previously profitable travel industry. The
coronavirus threat soon impacted that industry's workers, food and drink
suppliers, entertainers, crews, cleaners, and all associated family
members. As a result, with other cruise ships experiencing similar problems
<https://www.cnbc.com/2020/03/09/coronavirus-latest-updates.html> and
airlines in crisis, the travel industry was crippled, while the demand for
the goods and services associated with it shrank. It even undoubtedly cost
the Trump Organization
<https://www.motherjones.com/politics/2020/02/coronavirus-could-take-a-bite=
-out-of-trumps-wallet/>,
in part a travel and resort business, a penny or two.

Now, bear with me for a brief, deep dive into economics. Consider the
commonly used economic term "supply chain." It=E2=80=99s just a chain of pe=
ople or
businesses that interact with each other where money, goods, and services
are exchanged along the way. The more interactions that take place around
the world, the more global it obviously is. That=E2=80=99s why trade wars, =
though
initiated by leaders (and their giant egos), impact the economic lives of
so many from the top down.

In a world that=E2=80=99s seen a dramatic rise in isolationist politicians =
and
policies, the coronavirus reminds us that we still share a planet where not
everything is controllable by brute force or posturing. Medical, climate,
and financial crises can spread ever more rapidly in this distinctly
globalized world of ours for a variety of reasons. That=E2=80=99s why the o=
ld adage
an ounce of prevention is worth a pound of cure still holds.

The reality is that an economy based on a kind of inequality once unknown
to Americans is at a crossroads and the coronavirus seems to have infected
it. So even with the cards stacked in their favor, the unseemly wealthy and
the denizens of Wall Street can=E2=80=99t prevent real people from taking t=
he brunt
of the blowback. Nor will the Fed, whatever its rate cuts, nor Donald
Trump, whatever his tweets, be able to prevent the majority of Americans
from taking a significant hit in what=E2=80=99s sure to be a global economi=
c storm.
Maybe they can temporarily assuage stock market concerns, but there are no
guarantees.

Even if the extreme inequality of the present moment has its obvious
precedents, the volatility that=E2=80=99s now whipsawing across the world i=
s only
likely to continue to widen that great divide, possibly to the breaking
point.

This Time, Inequality Is Different

The prescription for the last major financial crisis went something like
this: The biggest Wall Street banks faced a subprime loan abyss of their
own making, but one that would come to hurt everyone else. They had crafted
<https://www.theguardian.com/business/2008/apr/08/creditcrunch.banking>
trillions
of dollars' worth of toxic assets based on the assumption=E2=80=94bizarre in
retrospect=E2=80=94that there would be more incoming subprime loan payments=
 than
there had been subprime loans to begin with. When the subprime mortgage
crisis began and payments became delinquent or morphed into defaults, the
toxic assets of those banks went belly-up
<https://www.theguardian.com/business/2008/apr/08/creditcrunch.banking>.
Having used other people=E2=80=99s money to gamble on risk and having creat=
ed
complex assets to make their bets, they lost money themselves big time, but
it was others who truly paid the price.

Some of those big banks, like two of my former employers Bear Stearns and
Lehman Brothers, had borrowed too much from other big banks. When they
couldn=E2=80=99t repay the money they had borrowed to bet on those toxic as=
sets,
they went bankrupt.

The surviving big lenders and politically well-connected banks like
JPMorgan Chase and Goldman Sachs played it differently. They extracted an
epic level of support from the Obama administration (read: us taxpayers)
and the Federal Reserve and so survived before, of course, going on to
thrive. Other major central banks followed the Fed=E2=80=99s lead in loweri=
ng
rates, while purchasing assets from troubled
<https://www.vox.com/2014/6/20/18079946/fed-vs-crisis> banks in return for
cash.

By December 2008
<https://www.federalreserve.gov/newsevents/pressreleases/monetary20081216b.=
htm>,
federal funds rates (the interest rates by which banks lend money to each
other based on what they have on reserve at the Fed) had been pushed down
to zero and they=E2=80=99ve remained at historically low levels ever since.
According to a 2011 Government Accountability Office report
<https://www.sanders.senate.gov/imo/media/doc/101911%20-%20THE%20SANDERS%20=
REPORT%20ON%20THE%20GAO%20AUDIT%20ON%20MAJOR%20CONFLICTS%20OF%20INTEREST%20=
AT%20THE%20FEDERAL%20RESERVE1.pdf>,
the Fed extended $16 trillion in loans in the wake of the financial crisis,
most of which went to the financial industry. Over time, it also created
more than $4.5 trillion
<https://www.reuters.com/article/us-usa-fed-bonds/fed-takes-balanced-approa=
ch-to-trimming-u-s-bond-holdings-idUSKCN1BV2NW>
to
purchase Treasury and mortgage bonds from Wall Street firms, most of which
it now houses on its own books.

During the financial crisis of those years, the world=E2=80=99s major centr=
al
banks, mostly in G-7 countries like Germany and Japan, created what was
supposed to be an "emergency" policy, which soon enough became a new normal
that=E2=80=99s lasted 12 years. They kept the average cost of money flowing=
 to
those endangered banks, their largest corporate clients, and the markets at
near zero percent or even, in some instances, at negative rates. This
policy subsidized or socialized losses and eventually sent stock markets to
all-time highs.

The prevailing narrative then (and now) was that this "cheap money" would
incentivize banks to lend and that companies would use those loans to
invest in the future and in their workers, a grand experiment, it was
claimed, to spur economic growth for real people. Think of it as a classic
case of a trickle-down economic theory on steroids.

What happened in practice was a staggering increase in global inequality.
In effect, the major central banks became centralized ATM machines for the
world=E2=80=99s banking system and financial markets. The amount of debt cr=
eated by
their respective governments=E2=80=94because the rates and cost of borrowin=
g that
debt were so low=E2=80=94skyrocketed
<https://www.latimes.com/business/la-fi-investing-quarterly-debt-20160710-s=
nap-story.html>.
The value
<https://www.bloomberg.com/news/articles/2019-07-24/storing-up-trouble-why-=
central-banks-may-only-delay-recession>
of
financial assets like stocks, as well as government and corporate bonds,
ballooned
<https://www.bloomberg.com/news/articles/2019-07-24/storing-up-trouble-why-=
central-banks-may-only-delay-recession>,
creating what even major business news channels would characterize as a
<https://www.cnn.com/2019/08/12/perspectives/central-bank-fed-bubble/index.=
html>
 "bubble.
<https://www.cnn.com/2019/08/12/perspectives/central-bank-fed-bubble/index.=
html>
"

Central bank leaders and politicians embraced the idea that the ongoing
"emergency" creation of cheap money was for the good of the economy. And
every time the markets got skittish, central banks turned to the same
money-creating well to help them.

Like Dr. Frankenstein, the experiment became the monster. The byproduct of
making lots of money available to a sliver of society was, of course, that
it flowed to the top, only exacerbating the already significant inequality
on this planet. That=E2=80=99s why there=E2=80=99s something the same and y=
et so different
about today=E2=80=99s inequality.

In Wall Street-speak, today=E2=80=99s level of inequality globally is *the*=
 "trend."
After all, over the past three decades
<https://markets.businessinsider.com/news/stocks/income-inequality-reached-=
highest-level-ever-recorded-in-2018-2019-9-1028559996>,
the gap between the haves and have-nots has hit historic highs, especially
<https://www.epi.org/publication/decades-of-rising-economic-inequality-in-t=
he-u-s-testimony-before-the-u-s-house-of-representatives-ways-and-means-com=
mittee/>
in
the United States. According
<https://www.marketwatch.com/story/americas-super-wealthy-own-more-stocks-l=
eaving-average-people-in-the-dust-2019-01-28>
to
Daan Struyven, senior economist at Goldman Sachs (another of my former
employers), "The wealthiest 0.1% and 1% of households [in the U.S.] now own
respectively about 17% and 50%
<https://www.marketwatch.com/story/americas-super-wealthy-own-more-stocks-l=
eaving-average-people-in-the-dust-2019-01-28>
of
total household equities, up significantly from 13% and 39% in the late
1980s." And just over half
<https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx> =
of
Americans "own" stocks in some fashion, if you include those with 401(k)
plans, shares in an equity mutual fund, or an IRA. So when the market pops
up, inequality doesn=E2=80=99t shrink. It only grows.

Yet, on the other hand, there=E2=80=99s something dramatically different ab=
out this
particular period of inequality. In quant speak, that=E2=80=99s the genuine
outlier. During this post-2008 crisis period, much of that
low-interest-rate money unleashed by the central banks and its benefits
have gone  disproportionally
<https://www.bloomberg.com/opinion/articles/2018-04-10/qe-and-inequality-th=
e-two-seem-to-go-together>
to
the top 1%.

The Fed, the Money, and the Inequality

In countries where central banks intervened the most, the increase in the
total value of stock markets outpaced economic growth. Yet Fed Chairman
Jerome Powell claimed
<https://www.reuters.com/article/us-usa-fed-powell/fed-chair-powell-no-reas=
on-rising-wages-job-gains-cant-continue-idUSKBN2062DJ>
that
"there is nothing about this economy that is out of kilter or imbalanced."

In fact, the speculation and investing in these years flies in the face of
that explanation. If it=E2=80=99s cheap and easy to access money and someon=
e wants
to grow that money, investing has long been considered the go-to option.
The stock market is an avenue where money can push up the value of share
prices by the force of its mere presence. In the world of big finance and
markets, however, what goes up can plummet down even faster.

The natural question then becomes: How did a soaring stock market,
propelled by cheap money, create yet more inequality? As a start, of
course, the increase in stock market values has gone predominantly to the
relative few who are significantly invested in those markets. That=E2=80=99s
because, in terms of wealth, the top 10% of Americans own 84% of the stock
market
<https://fortune.com/2020/02/05/stock-home-ownership-debt-wealth-gap/>, up
from an already staggering 77% in 2001. In addition, as *Fortune *Magazine =
put
it <https://fortune.com/2020/02/05/stock-home-ownership-debt-wealth-gap/>
recently,
"The top 1% continues to increase their stranglehold on wealth in this
country, while the middle and lower class are losing ground."

We=E2=80=99re talking, of course, about the wealthiest people and companies=
 in
society, including corporate executives who get paid in shares and stock
options and are often capable of pushing up the price of their own shares
by deploying money to buy them back
<https://www.theatlantic.com/magazine/archive/2019/08/the-stock-buyback-swi=
ndle/592774/>.
If stock markets are floating on that cheap money, what happens if (or
rather when) it goes away? What happens when serious trouble builds
requiring something other than the ability of central banks to combat it
with more cheap money? The answer could be a massive, even historic, stock
market crash.

Finally, if cheap money can inflate financial assets more than the real
economy and the wealthy possess more of it than most people, won=E2=80=99t =
that
simply increase inequality to yet greater heights? The answer is: yes. "So
in some sense the source of higher inequality is Fed policies, which pushed
stock prices and home prices higher," as Deutsche Bank=E2=80=99s chief econ=
omist
Torsten Sl=C3=B8k noted
<https://www.marketwatch.com/story/the-richest-10-of-households-now-represe=
nt-70-of-all-us-wealth-2019-05-24>
=2E

The Election and Inequality

If we learned anything from the 2016 election (and from where the 2020
election is headed so far), it=E2=80=99s that Americans, whether on the lef=
t or
right, don=E2=80=99t like having the deck stacked against them. President T=
rump
struck a populist, anti-establishment chord in his voters in 2016 (despite
being a billionaire), including among workers
<https://www.nytimes.com/2017/08/15/upshot/the-obama-trump-voters-are-real-=
heres-what-they-think.html>
who
had once voted Democratic yet were feeling ever more economically insecure
when it came to their future and that of their children.

President Trump has taken aim at Fed Chairman Powell both for raising rates
in 2018 and for not lowering them enough in response to the recent
coronavirus dive. In tweets, he implied that Powell was the enemy
<https://www.cnbc.com/2019/08/23/trump-tweets-who-is-our-bigger-enemy-fed-c=
hairman-powell-or-chinese-president-xi.html>
of
all that=E2=80=99s good (for Trump) by being unwilling to bend fully to Whi=
te House
pressure on monetary policy. In the wake of Powell=E2=80=99s recent lowerin=
g of
those rates, the president tweeted,
<https://www.cnbc.com/2020/03/02/trump-knocks-fed-for-not-cutting-as-usual-=
jay-powell-and-the-federal-reserve-are-slow-to-act.html>
"As
usual, Jay Powell and the Federal Reserve are slow to act. Germany and
others are pumping money into their economies. Other Central Banks are much
more aggressive."

Trump=E2=80=99s policies=E2=80=94notably the trade war with China that has =
hurt
<https://www.reuters.com/article/us-usa-trade-china-costs-factbox/factbox-f=
rom-phone-makers-to-farmers-the-toll-of-trumps-trade-wars-idUSKCN1VE00B>
American
farmers and manufacturers=E2=80=94have placed workers in an ever more econo=
mically
vulnerable position. At the same time, the administration=E2=80=99s tax cut=
s for
major U.S. corporations (and billionaires) haven=E2=80=99t done the poor or=
 working
<https://www.bloomberg.com/news/articles/2019-05-14/trump-s-china-tariffs-h=
it-america-s-poor-and-working-class-the-hardest>
class
any favors either.

But Trump knows
<https://www.wsj.com/articles/trump-says-dollar-getting-too-strong-wont-lab=
el-china-currency-manipulator-1492024312>
that
cheap money, if it flows anywhere quickly, will flow to a stock market that
he=E2=80=99s repeatedly touted as being up big under his administration. An=
d until
a couple of weeks ago, the Dow had indeed rallied by as much as 61% since
<https://www.cnbc.com/2020/02/29/the-dow-is-up-38percent-since-trumps-elect=
ion-down-from-61percent-in-a-matter-of-days-amid-sell-off.html>
the
2016 election. In comparison, the average annual growth in gross domestic
product has been stuck around 2.5% per year
<https://www.axios.com/presidents-economy-gdp-trump-5d042c64-ace6-4904-8602=
-40003f917719.html>
=2E

If the coronavirus has shown us anything, it=E2=80=99s that unforeseen fact=
ors can
crush the market and, by extension, the economy and American workers. This
will incite the Fed and central banks elsewhere to intervene under the
guise of helping the economy. March=E2=80=99s emergency
<https://www.cnn.com/2020/03/03/economy/federal-reserve-rate-cut/index.html>
rate-cut
was the first since the financial crisis of 2008. It was also a clear sign
that the Fed is deeply concerned about the dangers a potential global
pandemic can inflict on a thoroughly globalized economy and its banking
systems.

If recent years have taught us anything, it=E2=80=99s that the official res=
ponses
to crises will ultimately help Wall Street
<https://www.washingtonpost.com/business/2020/03/03/banks-lobby-coronavirus=
/>
and
the markets, while leaving real people behind again
<https://time.com/5795651/coronavirus-workers-economy-inequality/>. It=E2=
=80=99s a
vicious cycle that will only stoke inequality further until, of course,
whether thanks to the coronavirus or some unknown future development, it
all comes tumbling down.

Only creating a more level playing field and a new, sustainable, more equal
path forward could alter this fate=E2=80=94and count on one thing: that won=
=E2=80=99t come
from central bank interventions or from the Trump administration. You would
need the sort of systemic overhaul that would result in real policies that
could stimulate economies from the ground up. For the present
<https://www.cdc.gov/coronavirus/2019-ncov/index.html>, wash your hands,
don=E2=80=99t touch your face, and hold your breath.
[image: Nomi Prins] <https://www.commondreams.org/author/nomi-prins>

Nomi Prins <https://www.commondreams.org/author/nomi-prins> is a former
Wall Street executive and author. Her newest book is *Collusion: How
Central Bankers Rigged the World
<http://www.amazon.com/dp/1568585624/ref=3Dnosim/?tag=3Dtomdispatch-20http:=
//www.amazon.com/dp/1568585624/ref=3Dnosim/?tag=3Dtomdispatch-20>
*(Nation
Books). Her previous books include A*ll the Presidents' Bankers: The Hidden
Alliances That Drive American Powe*r
<http://www.amazon.com/dp/1568584792/ref=3Dnosim/?tag=3Dtomdispatch-20> (Na=
tion
Books) and *Other People's Money: The Corporate Mugging of America
<https://www.amazon.com/dp/1595580638?tag=3Dcommondreams-20&camp=3D0&creati=
ve=3D0&linkCode=3Das1&creativeASIN=3D1595580638&adid=3D0917AZVNQ446NS0ZSYYQ=
&>*.
Follow her on Twitter: @nomiprins <https://twitter.com/nomiprins>

--=20

---=20
You received this message because you are subscribed to the Google Groups "=
Sid-l" group.
To unsubscribe from this group and stop receiving emails from it, send an e=
mail to [email protected].
To view this discussion on the web visit https://groups.google.com/d/msgid/=
sid-l/CACKppcz8p2%2B4_aN%2BY4myNukg9BPEM8RfFGiN6jwxKJFAROr-WQ%40mail.gmail.=
com.

--0000000000007b75b605a0b00ddb
Content-Type: text/html; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable

<div dir=3D"ltr"><div class=3D"gmail_default"><b><font face=3D"georgia, ser=
if"><a href=3D"https://www.commondreams.org/views/2020/03/12/fed-virus-and-=
inequality" target=3D"_blank">https://www.commondreams.org/views/2020/03/12=
/fed-virus-and-inequality</a><br><br><font size=3D"4">Common Dreams=C2=A0 =
=C2=A0 =C2=A0 =C2=A0 =C2=A0 March 12, 2020</font><br><br><font size=3D"6">T=
he Fed, the Virus, and Inequality</font><br><br><font size=3D"4">A global D=
r. Frankenstein at work.</font><br><br><font size=3D"4">by Nomi Prins</font=
></font></b></div><div class=3D"gmail_default"><font face=3D"georgia, serif=
"><br></font><div style=3D"font-size:17px;box-sizing:inherit"><div style=3D=
"box-sizing:inherit"><div style=3D"box-sizing:inherit"><div style=3D"box-si=
zing:inherit"><font color=3D"#000000" face=3D"georgia, serif"><img src=3D"h=
ttps://www.commondreams.org/sites/default/files/styles/cd_large/public/view=
s-article/stockmarket_0.jpeg?itok=3D7fnah11U" width=3D"472" height=3D"247" =
alt=3D"What happens when serious trouble builds requiring something other t=
han the ability of central banks to combat it with more cheap money? The an=
swer could be a massive, even historic, stock market crash. (Photo: Scott B=
eale on Flickr)" style=3D"box-sizing:inherit;border:0px;margin-right:0px"><=
/font></div></div></div></div><div style=3D"box-sizing:inherit;background-i=
mage:initial;background-position:initial;background-size:initial;background=
-repeat:initial;background-origin:initial;background-clip:initial;padding:5=
px 10px"><div style=3D"box-sizing:inherit"><div style=3D"box-sizing:inherit=
"><p style=3D"box-sizing:inherit;margin:0px"><font color=3D"#000000" face=
=3D"georgia, serif"><b style=3D"background-color:rgb(255,255,255)">What hap=
pens when serious trouble builds requiring something other than the ability=
 of central banks to combat it with more cheap money? The answer could be a=
 massive, even historic, stock market crash. (Photo: Scott Beale on Flickr)=
</b></font></p></div></div></div><div style=3D"font-size:17px;box-sizing:in=
herit"><div style=3D"box-sizing:inherit"><div style=3D"box-sizing:inherit">=
<div style=3D"box-sizing:inherit"><p style=3D"box-sizing:inherit"><font col=
or=3D"#000000" face=3D"georgia, serif">Whether you=E2=80=99re invested in t=
he stock market or not, you=E2=80=99ve likely noticed that it=E2=80=99s bee=
n on a roller coaster lately. The White House and most of the D.C. Beltway =
crowd tend to equate the performance of the stock market with that of the b=
roader economy. To President Trump=E2=80=99s extreme chagrin,=C2=A0<a href=
=3D"https://www.cnbc.com/2020/02/28/us-stocks-erase-3point18-trillion-in-va=
lue-this-week-amid-coronavirus-tailspin.html" style=3D"box-sizing:inherit;b=
ackground:0px 0px;text-decoration-line:none" target=3D"_blank">$3.18 trilli=
on</a>=C2=A0in stock market value vaporized during the last week of Februar=
y. Stock markets around the world also fell dramatically. When all was said=
 and done,=C2=A0<a href=3D"https://www.reuters.com/article/us-china-health-=
markets-global/going-viral-six-charts-and-the-6-trillion-loss-idUSKCN20M2F6=
" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none"=
 target=3D"_blank">$6 trillion</a>=C2=A0had been at least temporarily erase=
d from them. It was the=C2=A0<a href=3D"https://nypost.com/2020/02/28/us-st=
ocks-continue-tumbling-from-coronavirus-panic-as-global-losses-hit-5t/" sty=
le=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" targ=
et=3D"_blank">worst week</a>=C2=A0for the markets since the financial crisi=
s of 2008 and it would only get worse from there.</font></p><p style=3D"box=
-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif"><a style=
=3D"box-sizing:inherit;background:0px 0px"></a>In the wake of that, the Fed=
eral Reserve kicked into gear. By the first week of March, after high-level=
 coordination among the Group of Seven (G-7) countries and their financial =
elites, the Fed acted as it largely had since the financial crisis, but wit=
h more intensity, giving the markets a brief shot in the arm.</font></p><p =
style=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif=
">In a move that Wall Street and the White House had clamored for, the Fed=
=C2=A0<a href=3D"https://finance.yahoo.com/news/fed-cuts-rates-by-50-basis-=
points-amid-coronavirus-concerns-150008506.html" style=3D"box-sizing:inheri=
t;background:0px 0px;text-decoration-line:none" target=3D"_blank">cut</a>=
=C2=A0the level of interest rates by half a percentage point. The markets r=
eacted by doing exactly the opposite of what the Fed hoped and, after havin=
g briefly soared, the Dow then tanked=C2=A0<a href=3D"https://www.cnn.com/2=
020/03/03/investing/dow-stock-market-today/index.html" style=3D"box-sizing:=
inherit;background:0px 0px;text-decoration-line:none" target=3D"_blank">nea=
rly 1,000</a>=C2=A0points that day. The next day, it rose 1,173 points (als=
o partially attributed to Wall Street=E2=80=99s embrace of Joe Biden=E2=80=
=99s Super Tuesday results), only to plunge again soon after.=C2=A0 Then, t=
his Monday, within a few minutes of opening, the markets dropped=C2=A0<a hr=
ef=3D"https://www.npr.org/2020/03/09/813619387/dow-dives-1-900-points-nyse-=
halts-trading-as-stock-indexes-plummet" style=3D"box-sizing:inherit;backgro=
und:0px 0px;text-decoration-line:none" target=3D"_blank">more than 7%</a>, =
triggering a halt in trading.</font></p><p style=3D"box-sizing:inherit"><fo=
nt color=3D"#000000" face=3D"georgia, serif">Dizzy yet? Okay. Let=E2=80=99s=
 take a step back.</font></p><p style=3D"box-sizing:inherit"><font color=3D=
"#000000" face=3D"georgia, serif">Wall Street doesn=E2=80=99t like uncertai=
nty. Worries about the outbreak of, and economic fallout from, the coronavi=
rus have stoked fears globally, only compounded by the start of an=C2=A0<a =
href=3D"https://finance.yahoo.com/news/stock-market-news-live-stock-oil-fut=
ures-crater-on-coronavirus-crude-war-fears-224253935.html" style=3D"box-siz=
ing:inherit;background:0px 0px;text-decoration-line:none" target=3D"_blank"=
>oil-price war</a>. Big Finance doesn=E2=80=99t deal well when its money is=
 on the line. What=E2=80=99s referred to as a liquidity shortage (or lack o=
f free-flowing money) is Wall Street=E2=80=99s deepest fear. That=E2=80=99s=
 what happened during the financial crisis of 2008. Under those circumstanc=
es, banks stop lending=E2=80=94both to each other, to corporations, and to =
real people=E2=80=94and look to external forces like its &quot;<a href=3D"h=
ttps://www.federalreserve.gov/newsevents/speech/fischer20160210a.htm" style=
=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" target=
=3D"_blank">lender of last resort</a>,&quot; the Federal Reserve, and to th=
e government to bail them out.</font></p><p style=3D"box-sizing:inherit"><f=
ont color=3D"#000000" face=3D"georgia, serif">That=E2=80=99s why what=E2=80=
=99s transpired with the coronavirus is so illuminating. It=E2=80=99s not l=
ike the financial crisis, but central bank reactions are similar. There is =
a known chain of events that underscores the transmission of diseases: clos=
e contact, shared food, a stray cough or sneeze. What=E2=80=99s unknown wit=
h a novel virus is how long and far and deep that transmission will go into=
 any society, how it might still mutate, and how disastrous=E2=80=94as in t=
he case of=C2=A0<a href=3D"https://www.washingtonpost.com/history/2020/02/2=
9/1918-flu-coronavirus-trump/" style=3D"box-sizing:inherit;background:0px 0=
px;text-decoration-line:none" target=3D"_blank">the Spanish Flu</a>=C2=A0of=
 1918=E2=80=94the consequences could be.</font></p><p style=3D"box-sizing:i=
nherit"><font color=3D"#000000" face=3D"georgia, serif">On our globalized p=
lanet, the constant movement of people across borders has made the world sm=
aller and more connected than ever. This means that it=E2=80=99s made disea=
ses ever more communicable and its ability to throw a monkey wrench into a =
globalized economic system and financial markets so much greater. People of=
 various ages from varied cultures, religions, and economic statuses have t=
he ability to intermingle in transit, whether at an airport, in a grocery s=
tore, or on a subway platform.</font></p><p style=3D"box-sizing:inherit"><f=
ont color=3D"#000000" face=3D"georgia, serif">Several passengers with the c=
oronavirus, initially confined to a cruise ship off the coast of Japan, for=
 instance, led to=C2=A0<a href=3D"https://www.reuters.com/article/us-china-=
health-australia/australias-first-coronavirus-death-confirmed-as-former-dia=
mond-cruise-passenger-idUSKBN20O17A" style=3D"box-sizing:inherit;background=
:0px 0px;text-decoration-line:none" target=3D"_blank">fatalities</a>=C2=A0a=
nd contagion elsewhere and were among the many catalysts in the spread of t=
hat disease and of associated=C2=A0<a href=3D"https://www.cnn.com/2020/02/2=
8/business/global-tourism-novel-coronavirus/index.html" style=3D"box-sizing=
:inherit;background:0px 0px;text-decoration-line:none" target=3D"_blank">ec=
onomic problems</a>=C2=A0to a distinctly globalized and previously profitab=
le travel industry. The coronavirus threat soon impacted that industry&#39;=
s workers, food and drink suppliers, entertainers, crews, cleaners, and all=
 associated family members. As a result, with other cruise ships experienci=
ng=C2=A0<a href=3D"https://www.cnbc.com/2020/03/09/coronavirus-latest-updat=
es.html" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-lin=
e:none" target=3D"_blank">similar problems</a>=C2=A0and airlines in crisis,=
 the travel industry was crippled, while the demand for the goods and servi=
ces associated with it shrank. It even undoubtedly cost the=C2=A0<a href=3D=
"https://www.motherjones.com/politics/2020/02/coronavirus-could-take-a-bite=
-out-of-trumps-wallet/" style=3D"box-sizing:inherit;background:0px 0px;text=
-decoration-line:none" target=3D"_blank">Trump Organization</a>, in part a =
travel and resort business, a penny or two.</font></p><p style=3D"box-sizin=
g:inherit"><font color=3D"#000000" face=3D"georgia, serif">Now, bear with m=
e for a brief, deep dive into economics. Consider the commonly used economi=
c term &quot;supply chain.&quot; It=E2=80=99s just a chain of people or bus=
inesses that interact with each other where money, goods, and services are =
exchanged along the way. The more interactions that take place around the w=
orld, the more global it obviously is. That=E2=80=99s why trade wars, thoug=
h initiated by leaders (and their giant egos), impact the economic lives of=
 so many from the top down.</font></p><p style=3D"box-sizing:inherit"><font=
 color=3D"#000000" face=3D"georgia, serif">In a world that=E2=80=99s seen a=
 dramatic rise in isolationist politicians and policies, the coronavirus re=
minds us that we still share a planet where not everything is controllable =
by brute force or posturing. Medical, climate, and financial crises can spr=
ead ever more rapidly in this distinctly globalized world of ours for a var=
iety of reasons. That=E2=80=99s why the old adage an ounce of prevention is=
 worth a pound of cure still holds.</font></p><p style=3D"box-sizing:inheri=
t"><font color=3D"#000000" face=3D"georgia, serif">The reality is that an e=
conomy based on a kind of inequality once unknown to Americans is at a cros=
sroads and the coronavirus seems to have infected it. So even with the card=
s stacked in their favor, the unseemly wealthy and the denizens of Wall Str=
eet can=E2=80=99t prevent real people from taking the brunt of the blowback=
. Nor will the Fed, whatever its rate cuts, nor Donald Trump, whatever his =
tweets, be able to prevent the majority of Americans from taking a signific=
ant hit in what=E2=80=99s sure to be a global economic storm. Maybe they ca=
n temporarily assuage stock market concerns, but there are no guarantees.</=
font></p><p style=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"ge=
orgia, serif">Even if the extreme inequality of the present moment has its =
obvious precedents, the volatility that=E2=80=99s now whipsawing across the=
 world is only likely to continue to widen that great divide, possibly to t=
he breaking point.</font></p><p style=3D"box-sizing:inherit"><span style=3D=
"box-sizing:inherit;font-weight:700"><font color=3D"#000000" face=3D"georgi=
a, serif">This Time, Inequality Is Different</font></span></p><p style=3D"b=
ox-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">The pres=
cription for the last major financial crisis went something like this: The =
biggest Wall Street banks faced a subprime loan abyss of their own making, =
but one that would come to hurt everyone else. They had=C2=A0<a href=3D"htt=
ps://www.theguardian.com/business/2008/apr/08/creditcrunch.banking" style=
=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" target=
=3D"_blank">crafted</a>=C2=A0trillions of dollars&#39; worth of toxic asset=
s based on the assumption=E2=80=94bizarre in retrospect=E2=80=94that there =
would be more incoming subprime loan payments than there had been subprime =
loans to begin with. When the subprime mortgage crisis began and payments b=
ecame delinquent or morphed into defaults, the toxic assets of those banks=
=C2=A0<a href=3D"https://www.theguardian.com/business/2008/apr/08/creditcru=
nch.banking" style=3D"box-sizing:inherit;background:0px 0px;text-decoration=
-line:none" target=3D"_blank">went belly-up</a>. Having used other people=
=E2=80=99s money to gamble on risk and having created complex assets to mak=
e their bets, they lost money themselves big time, but it was others who tr=
uly paid the price.</font></p><p style=3D"box-sizing:inherit"><font color=
=3D"#000000" face=3D"georgia, serif">Some of those big banks, like two of m=
y former employers Bear Stearns and Lehman Brothers, had borrowed too much =
from other big banks. When they couldn=E2=80=99t repay the money they had b=
orrowed to bet on those toxic assets, they went bankrupt.</font></p><p styl=
e=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">Th=
e surviving big lenders and politically well-connected banks like JPMorgan =
Chase and Goldman Sachs played it differently. They extracted an epic level=
 of support from the Obama administration (read: us taxpayers) and the Fede=
ral Reserve and so survived before, of course, going on to thrive. Other ma=
jor central banks followed the Fed=E2=80=99s lead in lowering rates, while =
purchasing assets from=C2=A0<a href=3D"https://www.vox.com/2014/6/20/180799=
46/fed-vs-crisis" style=3D"box-sizing:inherit;background:0px 0px;text-decor=
ation-line:none" target=3D"_blank">troubled</a>=C2=A0banks in return for ca=
sh.</font></p><p style=3D"box-sizing:inherit"><font color=3D"#000000" face=
=3D"georgia, serif">By=C2=A0<a href=3D"https://www.federalreserve.gov/newse=
vents/pressreleases/monetary20081216b.htm" style=3D"box-sizing:inherit;back=
ground:0px 0px;text-decoration-line:none" target=3D"_blank">December 2008</=
a>, federal funds rates (the interest rates by which banks lend money to ea=
ch other based on what they have on reserve at the Fed) had been pushed dow=
n to zero and they=E2=80=99ve remained at historically low levels ever sinc=
e. According to a=C2=A0<a href=3D"https://www.sanders.senate.gov/imo/media/=
doc/101911%20-%20THE%20SANDERS%20REPORT%20ON%20THE%20GAO%20AUDIT%20ON%20MAJ=
OR%20CONFLICTS%20OF%20INTEREST%20AT%20THE%20FEDERAL%20RESERVE1.pdf" style=
=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" target=
=3D"_blank">2011 Government Accountability Office report</a>, the Fed exten=
ded $16 trillion in loans in the wake of the financial crisis, most of whic=
h went to the financial industry. Over time, it also created more=C2=A0<a h=
ref=3D"https://www.reuters.com/article/us-usa-fed-bonds/fed-takes-balanced-=
approach-to-trimming-u-s-bond-holdings-idUSKCN1BV2NW" style=3D"box-sizing:i=
nherit;background:0px 0px;text-decoration-line:none" target=3D"_blank">than=
 $4.5 trillion</a>=C2=A0to purchase Treasury and mortgage bonds from Wall S=
treet firms, most of which it now houses on its own books.</font></p><p sty=
le=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">D=
uring the financial crisis of those years, the world=E2=80=99s major centra=
l banks, mostly in G-7 countries like Germany and Japan, created what was s=
upposed to be an &quot;emergency&quot; policy, which soon enough became a n=
ew normal that=E2=80=99s lasted 12 years. They kept the average cost of mon=
ey flowing to those endangered banks, their largest corporate clients, and =
the markets at near zero percent or even, in some instances, at negative ra=
tes. This policy subsidized or socialized losses and eventually sent stock =
markets to all-time highs.</font></p><p style=3D"box-sizing:inherit"><font =
color=3D"#000000" face=3D"georgia, serif">The prevailing narrative then (an=
d now) was that this &quot;cheap money&quot; would incentivize banks to len=
d and that companies would use those loans to invest in the future and in t=
heir workers, a grand experiment, it was claimed, to spur economic growth f=
or real people. Think of it as a classic case of a trickle-down economic th=
eory on steroids.</font></p><p style=3D"box-sizing:inherit"></p><div style=
=3D"box-sizing:inherit"></div><p style=3D"box-sizing:inherit"><font color=
=3D"#000000" face=3D"georgia, serif">What happened in practice was a stagge=
ring increase in global inequality. In effect, the major central banks beca=
me centralized ATM machines for the world=E2=80=99s banking system and fina=
ncial markets. The amount of debt created by their respective governments=
=E2=80=94because the rates and cost of borrowing that debt were so low=E2=
=80=94<a href=3D"https://www.latimes.com/business/la-fi-investing-quarterly=
-debt-20160710-snap-story.html" style=3D"box-sizing:inherit;background:0px =
0px;text-decoration-line:none" target=3D"_blank">skyrocketed</a>. The=C2=A0=
<a href=3D"https://www.bloomberg.com/news/articles/2019-07-24/storing-up-tr=
ouble-why-central-banks-may-only-delay-recession" style=3D"box-sizing:inher=
it;background:0px 0px;text-decoration-line:none" target=3D"_blank">value</a=
>=C2=A0of financial assets like stocks, as well as government and corporate=
 bonds,=C2=A0<a href=3D"https://www.bloomberg.com/news/articles/2019-07-24/=
storing-up-trouble-why-central-banks-may-only-delay-recession" style=3D"box=
-sizing:inherit;background:0px 0px;text-decoration-line:none" target=3D"_bl=
ank">ballooned</a>, creating what even major business news channels would c=
haracterize=C2=A0<a href=3D"https://www.cnn.com/2019/08/12/perspectives/cen=
tral-bank-fed-bubble/index.html" style=3D"box-sizing:inherit;background:0px=
 0px;text-decoration-line:none" target=3D"_blank">as a</a>=C2=A0&quot;<a hr=
ef=3D"https://www.cnn.com/2019/08/12/perspectives/central-bank-fed-bubble/i=
ndex.html" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-l=
ine:none" target=3D"_blank">bubble.</a>&quot;</font></p><p style=3D"box-siz=
ing:inherit"><font color=3D"#000000" face=3D"georgia, serif">Central bank l=
eaders and politicians embraced the idea that the ongoing &quot;emergency&q=
uot; creation of cheap money was for the good of the economy. And every tim=
e the markets got skittish, central banks turned to the same money-creating=
 well to help them.</font></p><p style=3D"box-sizing:inherit"><font color=
=3D"#000000" face=3D"georgia, serif">Like Dr. Frankenstein, the experiment =
became the monster. The byproduct of making lots of money available to a sl=
iver of society was, of course, that it flowed to the top, only exacerbatin=
g the already significant inequality on this planet. That=E2=80=99s why the=
re=E2=80=99s something the same and yet so different about today=E2=80=99s =
inequality.</font></p><p style=3D"box-sizing:inherit"><font color=3D"#00000=
0" face=3D"georgia, serif">In Wall Street-speak, today=E2=80=99s level of i=
nequality globally is=C2=A0<em style=3D"box-sizing:inherit">the</em>=C2=A0&=
quot;trend.&quot; After all, over the past=C2=A0<a href=3D"https://markets.=
businessinsider.com/news/stocks/income-inequality-reached-highest-level-eve=
r-recorded-in-2018-2019-9-1028559996" style=3D"box-sizing:inherit;backgroun=
d:0px 0px;text-decoration-line:none" target=3D"_blank">three decades</a>, t=
he gap between the haves and have-nots has hit historic highs,=C2=A0<a href=
=3D"https://www.epi.org/publication/decades-of-rising-economic-inequality-i=
n-the-u-s-testimony-before-the-u-s-house-of-representatives-ways-and-means-=
committee/" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-=
line:none" target=3D"_blank">especially</a>=C2=A0in the United States.=C2=
=A0<a href=3D"https://www.marketwatch.com/story/americas-super-wealthy-own-=
more-stocks-leaving-average-people-in-the-dust-2019-01-28" style=3D"box-siz=
ing:inherit;background:0px 0px;text-decoration-line:none" target=3D"_blank"=
>According</a>=C2=A0to Daan Struyven, senior economist at Goldman Sachs (an=
other of my former employers), &quot;The wealthiest 0.1% and 1% of househol=
ds [in the U.S.] now own respectively about=C2=A0<a href=3D"https://www.mar=
ketwatch.com/story/americas-super-wealthy-own-more-stocks-leaving-average-p=
eople-in-the-dust-2019-01-28" style=3D"box-sizing:inherit;background:0px 0p=
x;text-decoration-line:none" target=3D"_blank">17% and 50%</a>=C2=A0of tota=
l household equities, up significantly from 13% and 39% in the late 1980s.&=
quot; And=C2=A0<a href=3D"https://news.gallup.com/poll/266807/percentage-am=
ericans-owns-stock.aspx" style=3D"box-sizing:inherit;background:0px 0px;tex=
t-decoration-line:none" target=3D"_blank">just over half</a>=C2=A0of Americ=
ans &quot;own&quot; stocks in some fashion, if you include those with 401(k=
) plans, shares in an equity mutual fund, or an IRA. So when the market pop=
s up, inequality doesn=E2=80=99t shrink. It only grows.</font></p><p style=
=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">Yet=
, on the other hand, there=E2=80=99s something dramatically different about=
 this particular period of inequality. In quant speak, that=E2=80=99s the g=
enuine outlier. During this post-2008 crisis period, much of that low-inter=
est-rate money unleashed by the central banks and its benefits have gone=C2=
=A0 <a href=3D"https://www.bloomberg.com/opinion/articles/2018-04-10/qe-and=
-inequality-the-two-seem-to-go-together" style=3D"box-sizing:inherit;backgr=
ound:0px 0px;text-decoration-line:none" target=3D"_blank">disproportionally=
</a>=C2=A0to the top 1%.</font></p><p style=3D"box-sizing:inherit"><span st=
yle=3D"box-sizing:inherit;font-weight:700"><font color=3D"#000000" face=3D"=
georgia, serif">The Fed, the Money, and the Inequality</font></span></p><p =
style=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif=
">In countries where central banks intervened the most, the increase in the=
 total value of stock markets outpaced economic growth. Yet Fed Chairman Je=
rome Powell=C2=A0<a href=3D"https://www.reuters.com/article/us-usa-fed-powe=
ll/fed-chair-powell-no-reason-rising-wages-job-gains-cant-continue-idUSKBN2=
062DJ" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:=
none" target=3D"_blank">claimed</a>=C2=A0that &quot;there is nothing about =
this economy that is out of kilter or imbalanced.&quot;</font></p><p style=
=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">In =
fact, the speculation and investing in these years flies in the face of tha=
t explanation. If it=E2=80=99s cheap and easy to access money and someone w=
ants to grow that money, investing has long been considered the go-to optio=
n. The stock market is an avenue where money can push up the value of share=
 prices by the force of its mere presence. In the world of big finance and =
markets, however, what goes up can plummet down even faster.</font></p><p s=
tyle=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif"=
>The natural question then becomes: How did a soaring stock market, propell=
ed by cheap money, create yet more inequality? As a start, of course, the i=
ncrease in stock market values has gone predominantly to the relative few w=
ho are significantly invested in those markets. That=E2=80=99s because, in =
terms of wealth, the top 10% of Americans own 84% of the=C2=A0<a href=3D"ht=
tps://fortune.com/2020/02/05/stock-home-ownership-debt-wealth-gap/" style=
=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" target=
=3D"_blank">stock market</a>, up from an already staggering 77% in 2001. In=
 addition, as=C2=A0<em style=3D"box-sizing:inherit">Fortune=C2=A0</em>Magaz=
ine=C2=A0<a href=3D"https://fortune.com/2020/02/05/stock-home-ownership-deb=
t-wealth-gap/" style=3D"box-sizing:inherit;background:0px 0px;text-decorati=
on-line:none" target=3D"_blank">put it</a>=C2=A0recently, &quot;The top 1% =
continues to increase their stranglehold on wealth in this country, while t=
he middle and lower class are losing ground.&quot;</font></p><p style=3D"bo=
x-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif">We=E2=80=
=99re talking, of course, about the wealthiest people and companies in soci=
ety, including corporate executives who get paid in shares and stock option=
s and are often capable of pushing up the price of their own shares by depl=
oying money to=C2=A0<a href=3D"https://www.theatlantic.com/magazine/archive=
/2019/08/the-stock-buyback-swindle/592774/" style=3D"box-sizing:inherit;bac=
kground:0px 0px;text-decoration-line:none" target=3D"_blank">buy them back<=
/a>. If stock markets are floating on that cheap money, what happens if (or=
 rather when) it goes away? What happens when serious trouble builds requir=
ing something other than the ability of central banks to combat it with mor=
e cheap money? The answer could be a massive, even historic, stock market c=
rash.</font></p><p style=3D"box-sizing:inherit"><font color=3D"#000000" fac=
e=3D"georgia, serif">Finally, if cheap money can inflate financial assets m=
ore than the real economy and the wealthy possess more of it than most peop=
le, won=E2=80=99t that simply increase inequality to yet greater heights? T=
he answer is: yes. &quot;So in some sense the source of higher inequality i=
s Fed policies, which pushed stock prices and home prices higher,&quot; as =
Deutsche Bank=E2=80=99s chief economist Torsten Sl=C3=B8k=C2=A0<a href=3D"h=
ttps://www.marketwatch.com/story/the-richest-10-of-households-now-represent=
-70-of-all-us-wealth-2019-05-24" style=3D"box-sizing:inherit;background:0px=
 0px;text-decoration-line:none" target=3D"_blank">noted</a>.</font></p><p s=
tyle=3D"box-sizing:inherit"><span style=3D"box-sizing:inherit;font-weight:7=
00"><font color=3D"#000000" face=3D"georgia, serif">The Election and Inequa=
lity</font></span></p><p style=3D"box-sizing:inherit"><font color=3D"#00000=
0" face=3D"georgia, serif">If we learned anything from the 2016 election (a=
nd from where the 2020 election is headed so far), it=E2=80=99s that Americ=
ans, whether on the left or right, don=E2=80=99t like having the deck stack=
ed against them. President Trump struck a populist, anti-establishment chor=
d in his voters in 2016 (despite being a billionaire), including among=C2=
=A0<a href=3D"https://www.nytimes.com/2017/08/15/upshot/the-obama-trump-vot=
ers-are-real-heres-what-they-think.html" style=3D"box-sizing:inherit;backgr=
ound:0px 0px;text-decoration-line:none" target=3D"_blank">workers</a>=C2=A0=
who had once voted Democratic yet were feeling ever more economically insec=
ure when it came to their future and that of their children.</font></p><p s=
tyle=3D"box-sizing:inherit"><font color=3D"#000000" face=3D"georgia, serif"=
>President Trump has taken aim at Fed Chairman Powell both for raising rate=
s in 2018 and for not lowering them enough in response to the recent corona=
virus dive. In tweets, he implied that Powell was=C2=A0<a href=3D"https://w=
ww.cnbc.com/2019/08/23/trump-tweets-who-is-our-bigger-enemy-fed-chairman-po=
well-or-chinese-president-xi.html" style=3D"box-sizing:inherit;background:0=
px 0px;text-decoration-line:none" target=3D"_blank">the enemy</a>=C2=A0of a=
ll that=E2=80=99s good (for Trump) by being unwilling to bend fully to Whit=
e House pressure on monetary policy. In the wake of Powell=E2=80=99s recent=
 lowering of those rates, the president=C2=A0<a href=3D"https://www.cnbc.co=
m/2020/03/02/trump-knocks-fed-for-not-cutting-as-usual-jay-powell-and-the-f=
ederal-reserve-are-slow-to-act.html" style=3D"box-sizing:inherit;background=
:0px 0px;text-decoration-line:none" target=3D"_blank">tweeted,</a>=C2=A0&qu=
ot;As usual, Jay Powell and the Federal Reserve are slow to act. Germany an=
d others are pumping money into their economies. Other Central Banks are mu=
ch more aggressive.&quot;</font></p><p style=3D"box-sizing:inherit"><font c=
olor=3D"#000000" face=3D"georgia, serif">Trump=E2=80=99s policies=E2=80=94n=
otably the trade war with China that has=C2=A0<a href=3D"https://www.reuter=
s.com/article/us-usa-trade-china-costs-factbox/factbox-from-phone-makers-to=
-farmers-the-toll-of-trumps-trade-wars-idUSKCN1VE00B" style=3D"box-sizing:i=
nherit;background:0px 0px;text-decoration-line:none" target=3D"_blank">hurt=
</a>=C2=A0American farmers and manufacturers=E2=80=94have placed workers in=
 an ever more economically vulnerable position. At the same time, the admin=
istration=E2=80=99s tax cuts for major U.S. corporations (and billionaires)=
 haven=E2=80=99t done the=C2=A0<a href=3D"https://www.bloomberg.com/news/ar=
ticles/2019-05-14/trump-s-china-tariffs-hit-america-s-poor-and-working-clas=
s-the-hardest" style=3D"box-sizing:inherit;background:0px 0px;text-decorati=
on-line:none" target=3D"_blank">poor or working</a>=C2=A0class any favors e=
ither.</font></p><p style=3D"box-sizing:inherit"><font color=3D"#000000" fa=
ce=3D"georgia, serif">But Trump=C2=A0<a href=3D"https://www.wsj.com/article=
s/trump-says-dollar-getting-too-strong-wont-label-china-currency-manipulato=
r-1492024312" style=3D"box-sizing:inherit;background:0px 0px;text-decoratio=
n-line:none" target=3D"_blank">knows</a>=C2=A0that cheap money, if it flows=
 anywhere quickly, will flow to a stock market that he=E2=80=99s repeatedly=
 touted as being up big under his administration. And until a couple of wee=
ks ago, the Dow had indeed rallied by as much as=C2=A0<a href=3D"https://ww=
w.cnbc.com/2020/02/29/the-dow-is-up-38percent-since-trumps-election-down-fr=
om-61percent-in-a-matter-of-days-amid-sell-off.html" style=3D"box-sizing:in=
herit;background:0px 0px;text-decoration-line:none" target=3D"_blank">61% s=
ince</a>=C2=A0the 2016 election. In comparison, the average annual growth i=
n gross domestic product has been stuck around=C2=A0<a href=3D"https://www.=
axios.com/presidents-economy-gdp-trump-5d042c64-ace6-4904-8602-40003f917719=
.html" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:=
none" target=3D"_blank">2.5% per year</a>.</font></p><p style=3D"box-sizing=
:inherit"><font color=3D"#000000" face=3D"georgia, serif">If the coronaviru=
s has shown us anything, it=E2=80=99s that unforeseen factors can crush the=
 market and, by extension, the economy and American workers. This will inci=
te the Fed and central banks elsewhere to intervene under the guise of help=
ing the economy. March=E2=80=99s=C2=A0<a href=3D"https://www.cnn.com/2020/0=
3/03/economy/federal-reserve-rate-cut/index.html" style=3D"box-sizing:inher=
it;background:0px 0px;text-decoration-line:none" target=3D"_blank">emergenc=
y</a>=C2=A0rate-cut was the first since the financial crisis of 2008. It wa=
s also a clear sign that the Fed is deeply concerned about the dangers a po=
tential global pandemic can inflict on a thoroughly globalized economy and =
its banking systems.</font></p><p style=3D"box-sizing:inherit"><font color=
=3D"#000000" face=3D"georgia, serif">If recent years have taught us anythin=
g, it=E2=80=99s that the official responses to crises will ultimately=C2=A0=
<a href=3D"https://www.washingtonpost.com/business/2020/03/03/banks-lobby-c=
oronavirus/" style=3D"box-sizing:inherit;background:0px 0px;text-decoration=
-line:none" target=3D"_blank">help Wall Street</a>=C2=A0and the markets, wh=
ile leaving real people=C2=A0<a href=3D"https://time.com/5795651/coronaviru=
s-workers-economy-inequality/" style=3D"box-sizing:inherit;background:0px 0=
px;text-decoration-line:none" target=3D"_blank">behind again</a>. It=E2=80=
=99s a vicious cycle that will only stoke inequality further until, of cour=
se, whether thanks to the coronavirus or some unknown future development, i=
t all comes tumbling down.</font></p><p style=3D"box-sizing:inherit"><font =
color=3D"#000000" face=3D"georgia, serif">Only creating a more level playin=
g field and a new, sustainable, more equal path forward could alter this fa=
te=E2=80=94and count on one thing: that won=E2=80=99t come from central ban=
k interventions or from the Trump administration. You would need the sort o=
f systemic overhaul that would result in real policies that could stimulate=
 economies from the ground up.=C2=A0<a href=3D"https://www.cdc.gov/coronavi=
rus/2019-ncov/index.html" style=3D"box-sizing:inherit;background:0px 0px;te=
xt-decoration-line:none" target=3D"_blank">For the present</a>, wash your h=
ands, don=E2=80=99t touch your face, and hold your breath.</font></p></div>=
</div></div></div><div style=3D"font-size:17px;box-sizing:inherit;margin:50=
px 0px"><div style=3D"box-sizing:inherit"><div style=3D"box-sizing:inherit;=
margin:0px 0px 10px"><div id=3D"m_7436094805446779236m_290623792033507586gm=
ail-cdreams-profile-6605" style=3D"box-sizing:inherit"><div style=3D"box-si=
zing:inherit"><div style=3D"box-sizing:inherit;float:left;margin:4px 12px 1=
0px 0px"><div style=3D"box-sizing:inherit"><div style=3D"box-sizing:inherit=
"><div style=3D"box-sizing:inherit"><a href=3D"https://www.commondreams.org=
/author/nomi-prins" style=3D"box-sizing:inherit;background:0px 0px;text-dec=
oration-line:none" target=3D"_blank"><font color=3D"#000000" face=3D"georgi=
a, serif"><img src=3D"https://www.commondreams.org/sites/default/files/styl=
es/cd_bio_small/public/authors/nomi-prins.jpg?itok=3DqVoJio48" width=3D"65"=
 height=3D"65" alt=3D"Nomi Prins" style=3D"box-sizing:inherit;border:0px;ma=
x-width:100%;height:auto"></font></a></div></div></div></div><div style=3D"=
box-sizing:inherit"><div style=3D"box-sizing:inherit"><div style=3D"box-siz=
ing:inherit"><p style=3D"box-sizing:inherit;margin:0px 0px 1em;font-size:0.=
9em"><font color=3D"#000000" face=3D"georgia, serif"><a href=3D"https://www=
.commondreams.org/author/nomi-prins" style=3D"box-sizing:inherit;background=
:0px 0px;text-decoration-line:none" target=3D"_blank"><span style=3D"box-si=
zing:inherit;font-weight:700">Nomi Prins</span></a>=C2=A0is a former Wall S=
treet executive and author. Her newest book is=C2=A0<em style=3D"box-sizing=
:inherit"><a href=3D"http://www.amazon.com/dp/1568585624/ref=3Dnosim/?tag=
=3Dtomdispatch-20http://www.amazon.com/dp/1568585624/ref=3Dnosim/?tag=3Dtom=
dispatch-20" style=3D"box-sizing:inherit;background:0px 0px;text-decoration=
-line:none" target=3D"_blank">Collusion: How Central Bankers Rigged the Wor=
ld</a>=C2=A0</em>(Nation Books). Her previous books include=C2=A0<a href=3D=
"http://www.amazon.com/dp/1568584792/ref=3Dnosim/?tag=3Dtomdispatch-20" sty=
le=3D"box-sizing:inherit;background:0px 0px;text-decoration-line:none" targ=
et=3D"_blank">A<em style=3D"box-sizing:inherit">ll the Presidents&#39; Bank=
ers: The Hidden Alliances That Drive American Powe</em>r</a>=C2=A0(Nation B=
ooks) and=C2=A0<em style=3D"box-sizing:inherit"><a href=3D"https://www.amaz=
on.com/dp/1595580638?tag=3Dcommondreams-20&amp;camp=3D0&amp;creative=3D0&am=
p;linkCode=3Das1&amp;creativeASIN=3D1595580638&amp;adid=3D0917AZVNQ446NS0ZS=
YYQ&amp;" style=3D"box-sizing:inherit;background:0px 0px;text-decoration-li=
ne:none" target=3D"_blank">Other People&#39;s Money: The Corporate Mugging =
of America</a></em>.=C2=A0 Follow her on Twitter:=C2=A0<a href=3D"https://t=
witter.com/nomiprins" style=3D"box-sizing:inherit;background:0px 0px;text-d=
ecoration-line:none" target=3D"_blank"><span style=3D"box-sizing:inherit">@=
nomiprins</span></a></font></p></div></div></div></div></div></div></div></=
div></div></div>

<p></p>

-- <br />
<br />
--- <br />
You received this message because you are subscribed to the Google Groups &=
quot;Sid-l&quot; group.<br />
To unsubscribe from this group and stop receiving emails from it, send an e=
mail to <a href=3D"mailto:[email protected]">sid-l+unsubsc=
[email protected]</a>.<br />
To view this discussion on the web visit <a href=3D"https://groups.google.c=
om/d/msgid/sid-l/CACKppcz8p2%2B4_aN%2BY4myNukg9BPEM8RfFGiN6jwxKJFAROr-WQ%40=
mail.gmail.com?utm_medium=3Demail&utm_source=3Dfooter">https://groups.googl=
e.com/d/msgid/sid-l/CACKppcz8p2%2B4_aN%2BY4myNukg9BPEM8RfFGiN6jwxKJFAROr-WQ=
%40mail.gmail.com</a>.<br />

--0000000000007b75b605a0b00ddb--

------------=_1584052903-7785-112520
Content-Type: text/plain; charset="UTF-8"
Content-Disposition: inline
Content-Transfer-Encoding: 8bit

---
To unsubscribe: <mailto:[email protected]>
List help: <https://riseup.net/lists>

------------=_1584052903-7785-112520--