The Great Manipulation of the Financial System of 2020
While some might think it’s business as usual in the United States during the pandemic, you should think again.
Fed stimulus has taken a turn in how central banks are manipulating the numbers, and the K-shaped recovery is like a distribution of wealth that favors those at the top. How so?
The Fed has created a fake monetary situation, which explains why the stock market is surging while common sense would dictate it should be tanking. This could have dire consequences however for debt and for the long-term economy.
The Federal Reserve has done a number for the wealthy, with a super-accommodative stance with short-term rates pegged at near zero percent and the central bank pumping $120 billion per month into the financial system with its securities purchases.
This has skewed the entire marketplace, and consolidation is favoring just a few companies in the NASDAQ, names like FANG stocks and Tesla. Names like Snowflake, DoorDash and other hot IPOs. Names like Apple, Microsoft, Amazon and Alphabet who sit on tremendous cash reserves. In the race to 2-trillion dollar companies, the system is skewed in their favor.
This has also created a scenario while millions of people are suffering, the middle class who don’t work in the hospitality, travel, leisure, small business or restaurant sector are doing pretty fine. While hundreds of thousands face evictions and must go to food banks, the rest are doing great. A K-shaped recovery, all created by the greatest manipulation of our financial system we’ve ever seen.
Think about it, the total American net worth rose to $123.5 trillion in the third quarter, according to Federal Reserve figures released Friday. That’s an increase of $3.8 trillion, or 3.2%, from the second quarter. It’s up 7.6% from the same period a year earlier.
Wonder why the stock market keeps going up? There’s literally $Trillions of dollars on the sidelines that’s been coming back into the stock market in the last 8-12 weeks.
Fed stimulus with low-interest rates have created the ultimate vehicle for the richest to get richer. Much of the increase came thanks to a volatile but robust rally on Wall Street, which pushed the value of U.S. personal equity holdings up $2.8 trillion.
Real estate values rose a more modest $400 billion amid climbing property values across some big markets as well as suburban areas that have benefited from a flight from U.S. cities.
When we think of the U.S. economy, we’ve never seen such an artificially created scenario as in 2020, when states, hospitals, municipalities and school systems are bankrupt, not to mention airports, of course, with a substantial destruction of the small business and local retail sectors.
However for those who were already in a good place, things are going great. If that’s not a redistribution of wealth that favors the owner class, I don’t know what is. It’s also in all likelihood the end of capitalism as a free and fair competitive market.
With censorship I’m no longer able to share this on platforms like Medium or even Twitter. While State and local government debt also continued its upswing, rising 5.6% for the quarter, the Billionaire class have increased their wealth tremendously.
Just in the First Wave it rose over $10.2 trillion dollars. Over the Second Wave shutdowns, who knows how much more it will rise. This is more profitable than war, this pandemic.
You want a Santa Rally on the stock market, you’ll likely get it. This is because a second stimulus package is likely to be reached before the looming deadlines. While ethnic minorities suffer more deaths, more evictions and increased inequality, the ruling elite will be doing just great.
Witness the household net worth of Americans has hit a record $123.5 trillion amid the stock market surge. The K-shaped recovery doomed a wealth re-distribution the moment the Fed decided to buy bonds. It’s the greatest betrayal of capitalism and equality in the financial market, well, ever. Except you’ll never hear about it again.
Congress looks set to fight down to the wire about a pandemic stimulus package, and chances are good it could again disappoint. This because the State is not governed by politicians any longer. The decisions of the Fed to break historical norms and get so involved was not a democratic one.
When you pour $120 Billion per month into the stock market, it won’t crash like it did in March, 2020. Think about what the Fed has done. The Federal Reserve has taken unprecedented actions to save the economy during the coronavirus crisis that has created the K-shaped recovery and accelerated unprecedent wealth inequality that will take generations to fix, if it can be fixed.
- There have been rate cuts and a slew of credit and lending programs that could inject more than $6 trillion into the economy.
- The Fed plan injected another $2.3 trillion into businesses and revenue-pinched governments.
- It did not save the majority of local restaurants, retailers or related small businesses that were unable to stay afloat (around 33% of all SMBs in 2020).
- Fed purchased up to $600 billion in loans.
- The programs were far and away bigger than anything the central bank attempted during the financial crisis, and were announced in much less time than the 2008-09 efforts.
With this level of central bank intervention, money was directed artificially into the hands of FANG companies and billionaires in the most intricate fraud in American history. The pyramid scheme known as the stock market had done its job too well since the March 2020 lows.
It has became too apparent what has occurred. But you won’t read about this on Bloomberg, in the New York Times or even on Business Insider. Capitalism and democracy both descended into the reality that America has become a shadow state. It’s the best kept secret of 2020.
The rich and ultra rich did not have to suffer like the people, like Latin X or Black Americans. Like Millennials or younger GenX who had already had to face the 2008 crisis that derailed many of their careers. The Central Bank intervention was engineered to do what it did, create a K-shaped recovery that protected and profited the Americans who are truly in control of a failing system. A failing system of capitalism, democracy and an outdated financial system prone to manipulation at a scale we couldn’t imagine before we heard the name Covid-19.
Companies like Tesla, Amazon, Microsoft and Google have been great benefactors of the Covid-19 Pandemic.
I can personally like Jerome Powel, Donald Trump, Jeff Bezos, Elon Musk or Ray Dalio, but it doesn’t mean they will land on the right side of history.
There were 2,153 billionaires as of March 2020 with the ultra-rich worth $8.7 trillion. How much do you suppose they will be worth in March 2021? You would be amazed to find out. Something is very wrong when a pandemic can be used to transfer wealth like it has in the past months, and the second wave will keep padding their pockets.
Will wealth inequality matter to future generations? Will they even be brave enough to care? GenZ will face a different kind of workforce as they leave college. One of inequality, working from home, more competition, automation and massive corporate monopolies that will wage war, cyberpunk style, in between an empire in decline and an empire on the rise. Who stands to benefit from such a scenario? Not the ordinary people.
Tesla can join the S&P and rise 700% without even the fundamentals or a market cap in line with the reality of future EV sales and competition. FANG stocks won’t be remembered for their contribution to humanity, but how they hijacked the vehicle of wealth generation by the greatest manipulation of the system we’ve ever seen. Covid-19 will just be an asterisk: in 2020, the real heist was how we handled the situation.
The sad part is it’s not just a head scratcher, it’s actually criminal. But all is fair when you are the Fed. All is legal when you are the billionaire class. When the enemy of the state are the very leaders of capitalism, you have a problem the exodus of Silicon Valley cannot solve. You have an empire in decline about to enter a dark age.
With unlimited stimulus the Fed has doomed capitalism to a downward spiral of wealth inequality. Our economic system—once heralded for ensuring customer choice, stoking job creation and upward mobility, and sparking innovation—is failing us and the Fed have likely broken it permanently with their impulsive reaction (and well designed manipulation of our financial system) to the fearful stock decline of March 2020.