by Brandon Smith, Alt Market:
This past week after Donald Trump’s “Liberation Day” announcements the Dow Jones Index plunged by around 4000 points and the global panic was palpable. Social media was rife with nervous naysayers on both sides of the aisle – The leftists are panicking but also cheering because they think crashing markets will turn into public support for the woke commie brigade. A contingent of conservatives are panicking too, but I’ll get to that in a moment…
My response? Finally this farce of a market is facing a correction and smacking people in the face with five fingers of reality! I applaud the event because it’s something that needed to happen years ago. Most skeptics are wrong on the tariff issue, mainly because they think the stock market matters. It doesn’t. People are also terrified of tariffs because they think globalism matters. It doesn’t.
TRUTH LIVES on at https://sgtreport.tv/
This position might upset those who are heavily invested right now, but I would argue they are missing the macro picture and they need to look at the situation from a position of inevitability. Tariffs and the end of globalism are a necessary outcome. Here’s why we shouldn’t fear the Reaper…
Stocks Are Irrelevant Until Market Manipulation Ends
The narrative on social media (from critics on both sides) is that Trump is unwittingly destroying the US economy to spite foreign trading partners because they’re getting more out of us than we’re getting out of them. I can’t speak to Trump’s motives because I’m not a psychic, but I can say that it’s impossible for Trump to destroy the economy. Why? Because it was already destroyed over the past two decades (some would argue longer) by the Federal Reserve and previous administrations.
The economy was in dire straits when Biden left office. Nothing has really changed except stocks are no longer being propped up artificially (we’ll see how the Fed reacts).
In every instance since the crash of 2008 when the markets have shifted into correction territory, the central bank has stepped in to prevent a natural reversal. They print tens of trillions of dollars in fiat from thin air and then pump it into banks and international corporations in order to kick the can down the road for a little while longer.
The Dow Jones gained over 15,000 points in less than four years after the initial covid crash in 2020 (this is unheard of in a normal economy). ALL of these gains are connected directly to stimulus programs and subsequent inflation initiated by the Federal Reserve (cycled through the Yen carry trade and stock buybacks, among other pathways). They have been manipulating stocks into a condition of perpetual inflationary gains – But a reckoning has arrived in the shape of stagflation and it’s killing America slowly.
If stocks cannot survive without a constant flow of recycled fiat to prop them up, then the markets are not real. I suggest that the Dow Jones needs to undergo at least another 10,000 points in decline before valuations are grounded in some kind of reality, and that’s being generous. Some deflation is necessary to bring back affordability.
An economy based on inflation, illusion and comfortable ignorance is a nuclear bomb waiting to explode. There are many conservatives that understand this problem well, but even some of them are freaking out today because they also prefer to avoid facing the consequences of the farce being exposed.
They should know better.
I’ve been hearing Republican and Libertarian commentators decry the “Everything Bubble” for a long time, but many of these people cling like barnacles to the fantasy that there’s a silver bullet solution. Crypto is going to save us (no it’s not). Winning elections is going to save us (no it’s not). Revolution is going to save us (not in the short term). Gold is going to save us (again, not in the short term). There is no scenario in which we can avoid the pain of a financial reformation. There is no silver bullet solution, so stop waiting around for one to materialize.
Stocks Are Not An Indicator Of Economic Health
Stocks are not a leading indicator of economic health and it’s hard to find an instance when a crash has ever been the direct cause of a crisis rather than a symptom of something bigger. Stocks are, in fact, a trailing indicator of problems that should have been noticed long ago.
In nearly every major stock crash in modern history (including the crash of 1929) there were sufficient signs that the economy was in decay, but those signs were dismissed. If you’ve been waiting for a crash to tell you that it’s time to take a closer examination of our nation’s financial health then you’ve been blind.
Most People Don’t Care About The Markets
The wealthiest 10% of Americans own 93% of all stocks. Only 21% of American families own any shares directly. Another 40% own at least some shares indirectly through retirement programs, but their holdings are tiny – Nearly insignificant. Who actually cares about stocks? The vast majority of the populace does not. They might see stock indexes as an indicator of economic stability (this is an incorrect assumption), but they aren’t scrambling to adjust their portfolios right now.
In terms of market players, global corporations and banks benefit most from government and central bank interference in equities, not Joe Dirt or Jane Dirt just scraping by month-to-month, hoping for a modest house and a tiny stipend in a 401K. Is this a terrible indictment of “capitalism” and free markets? No. My point is that most of the people freaking out about tariffs and the markets are generally people who have large investments, or a political agenda.
