Sunday, March 21, 2010

The Stock Market as Propaganda Tool

When I was younger and naive (around my early 20s), and new to the job market, for whatever reason (even though I did not own stock, still don't and probably never will), I looked to the daily stock market results as some kind of indicator for how the broader economy was doing. That was a long time ago, when I still lived under that old paradigm of continuous, everlasting economic growth. The other day, in a conversation with my mother, she told me that the economy was recovering because the stock market was rising every day. She also has never owned stock.

I thought of these things as I was reading this piece by Charles Hugh Smith, on how the rising stock market can be used as a propaganda tool to make the broader economy look better than it actually is. The stock market has risen 75% from last year, yes, but when you factor in that up to 91% of stocks are owned by the top 10 percent, it's just a matter of the rich getting richer. Yet the mainstream media is trumpeting the stock market as a sign that the recession has ended for all Americans, which is pretty insulting to the many millions of people out of work. But I do think many people are beginning to wake up to the fact that more wealth on Wall Street doesn't translate to better times for Main Street. I thought the last paragraph was worth including:

The stock market isn't about building middle class wealth, and the middle class seems to have finally figured that out. The equity market is all about concentrating wealth and managing perception: if the top 10% is doing well, then the bottom 90% are supposed to feel better about the whole thing, too, even if they are poorer by every financial metric.

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