In point of fact, the Dow Jones Industrial Average now stands at record levels. It's a bumper crop! A jackpot! A total economic turnaround from those disastrous days after the 2008 crash! Look! Stock values have more than doubled, with the Dow going from sixty-eight hundred and change to over fourteen thousand.
Things are awesome!
Only, they aren't. The Dow, as even a math-challenged minister such as myself can easily observe, does not empirically measure the health of an economy. It measures one thing: A price-weighted index of 30 stocks in United States dollars.
What we know is that these stocks now cost nearly twice...in United States dollars...what they did in 2008. Are there significantly more jobs? No, not particularly. Is there a revolutionary new force driving real economic growth? No, there's not. Job growth has been meh. Incomes for all but the very top are flat, and the average household income has been falling.
What there has been a great deal more of over the last five years is money. For five years, we've been printing money...in the form of the Fed buying bonds. We've been doing that to the tune of $85 billion dollars every single month.
And so the exuberance on the part of Wall Street traders at the continuing surge of stock prices seems peculiar to me. Would we be celebrating if the price of milk had doubled? Or the price of gas? Why should we similarly celebrate if the price of entry into the Capitalist Cornucopia has doubled?
In the absence of any significant increase in production or improvement in the real economy, what appears to have happened is a simple absorption. We've printed money, and that money has gone directly into capital markets. Given the absence of material growth, dollars are worth less, which means the number of dollars required to purchase stock is higher.
I cannot see any other logical way to interpret what I'm seeing.
Meaning that taste in your mouth is not cake.