The stock market has been on a roller coaster ride these last few weeks as downward pressure due to fears of the negative global impact of the pandemic competes with governmental policies to boost the economy, with the former seeming to be winning, resulting in a net steep plunge since mid-February as the reality of the situation sank in.
Back on March 18, Jon Schwarz speculated as to whether the economic crisis might finally rid us of the fantasy that the stock market tells us something real and useful about the nature of the economy.
AFTER PRESIDENT Donald Trump’s press conference on the new coronavirus on Friday, he triumphantly sent supporters a signed chart showing the Dow Jones Industrial Average going up sharply as he spoke.
On the one hand, this was hilarious, since on Monday, the Dow had its second-worst day in history. Trump did not send out any signed charts about this.
On the other hand, this should terrify everyone. Even now, the president of the United States is lost in a fantasy world. Even worse, Trump’s fantasy is shared by many Americans. In this imaginary world, we can all get rich if the little flickering numbers on our iPhone’s Stocks app go up. It’s therefore also a disaster if the little numbers go down.
In reality, America’s stock market wealth was always a mirage, one which we now see dissolving in front of us. It’s dangerous for us to hope it will reappear, because it’s a distraction from the real world that we have to focus on more than ever.
He says that the rise in the stock market before the pandemic hit had little relation to the underlying economy.
American productivity, the most important factor in increasing economic well-being, has been growing quite slowly. In general, the stock market had been careening further and further out of whack with the underlying real economy. It’s just been a financial bubble, like the housing bubble that led to a second Great Depression a decade ago or the dot-com bubble before that.
America’s rulers in this age have done a great job imposing a false view of the world on us. In fact, even many of them have come to believe in it.
But with the worldwide pandemic we now face, we are going to experience something akin to war. As in war, physical facts can’t be ignored.
Unfortunately, at this time we have a president for whom ignoring reality seems to be hardwired into his brain.