Put another way, without government creating money via the Federal Reserve and creating opportunities via investments in our infrastructure and long term research, the equity in the stock market will poof
GOVERNMENT DOES MAKE MONEY
Since the American Revolution, the HUGE success of America and the unique value of its economy has come from governments investment in our common wealth. The true ancestor of the Republican Party, Alexander Hamilton, founded the National Bank so we .. the people .. would create enough dollars to finance an army, build ships, fight the Indians, and move west. President Jefferson, the founder of the Democratic Party, used federal founds to buy the Louisiana purchase and then to send Lewis and Clark to inventory and organize our new property. Later we .. the people .. used the same government moneys to build canals and string the first telegraph. President Lincoln used the same federal purse to build the transcontinental railroads. Late we .. the people bought Alaska, built the Panama Canal, transformed the Mississippi into a commercial waterway, built airports, created television and nuclear power plants, created the internet, …………..
Another example is education and research. Just as the federal investments in the Louisiana Purchase and Alaska created huge opportunities for entrepreneurs, our universities and research centers created the equity that is now Apple. Amazon, Boeing, …. If we do not seed the fields with federal dollars, we will lose that equity too.
This kind of money, the money we .. the people create is very different form the equity held by the stock market because the people’s money is there to create capital, whether that is the capital that let me buy a home or the capital needed to build a tunnel under Seattle. In contrast, the $150 billion held by Apple is mainly of value to its stockholders as an untaxed way of saving money they hope to spend. Unlike federal capital, Apple’s capital will poof if that company does not show it can make a profit. Put another way, without government creating money via the federal Reserve and creating opportunities via investments in our infrastructure and long term research, the equity in the stock market will poof.
BLAME THE TEA PARTY
The stock market is poofing because investors fear that the lack of government support for growth of capita resources in the US, means our companies will no longer be productive.
Stocks rose 30% last year, inflated in part by Federal Reserve monetary stimulus, and became overvalued. Now a combination of factors — economic data indicating the U.S. and global economies are not as strong as investors thought, the Fed ratcheting down its monetary stimulus, and the fact stocks simply ran past their true valuation — is causing a stock market decline. We’re probably looking at a roughly 10% correction here. There’s nothing unusual about that; such corrections are common. The only unusual thing about this one is that it too so long to arrive.