“What Looks Like A Rally May Just Be The Elites Passing Money Among Themselves”
by Chrstopher Caldwell
Why are citizens of the developed world looking a gift horse in the mouth? The Dow Jones Industrial Average rallied beyond 14,300 points this week, passing the highs it reached in 2007 just as the world economy was starting to wobble. And yet, this week, investors and pundits warned us not to read too much into it. They have a point. In the half-decade since the western financial system almost collapsed, the relationship between stock markets and the “real” economy has seemed more tenuous. Part of the reason people get less giddy about the Dow than they did five years ago is because they have learnt a bit about inequality. What looks like a recovery, a rally or an increase in consumer confidence may just be the effect of elites passing money among themselves. The US Federal Reserve has added more than $2tn to its balance sheet since 2007. In general, that tide of liquidity ought to lift all boats in the harbour. But when the harbour is an equity market, you won’t find your yacht lifted unless you own one.