Why “This Sucker Is Going Down”-Charles Hugh Smith
Alas, loose money has created a new set of metastasizing problems that will bring this sucker down: widening wealth-income inequality, the only possible result of our system of creating and distributing new money to banks, financiers and corporations; soaring systemic leverage that few see, much less understand; and perhaps most perverse, yet equally unnoticed, loose money has widened the gap between the real economy and the top layer of arcane finance to the point there is literally no connection at all.
The happy story about debt-dependent capitalism is that thriving companies borrow money from our wunnerful banks to invest in new factories, research, software development, etc., hiring millions of top-notch people–top-notch!–at generous salaries to boost productivity and make the entire nation wealthier.
Alas, it’s all a fraud. What actually happens is banks “invest” the new money in faster High Frequency Trading (HFT) computers so they can skim even more profit from the rigged “markets.” Productivity increase: zero. Social benefits: zero. Economic benefits to the nation at large: zero.
Virtually all the loose money created by the Fed is socially useless financial activity, enriching the few at the top of the wealth-power pyramid who own the financial machinery of repo’s, derivatives, FX swaps, leverage, and all the other tricks of the financial trade that has completely disconnected from the real-world economy.
via Why “This Sucker Is Going Down”-oftwominds-Charles Hugh Smith