How markets blow up the economy

I cringe every time someone tells me “it’s a market economy.” I understand the economic reality of that statement, but it also signals a loss of control.

What is market economy? That’s when the value of your 401(k) tanks. That’s when the price of gasoline and natural gas goes up because of decisions made 3,000 miles away. That is why everything from appliances to operations costs too much.

Nomi Prins is someone who knows the inner truth about the market economy. As a former Goldman Sachs employee, she has seen it and lived it. In her new book “Permanent Distortion: How the Financial Markets Abandoned the Economy Forever,” (Public Affairs, 2022), she again speaks truth to power.

Permanent distortion is an exposé of how the global economy has become “irretrievably shattered.” When it looks like the economy is slowing down, stocks rise. Pathetically low savings rates for most Americans mean huge profits in the bond market. Bearish markets mean big profits for computerized trading on Wall Street.

“We live in a permanently polarized world, where the mega-rich are the winners and the never-rich are the losers, of an unprecedented distortion that can never return to ‘normal,'” says Prins, whom I have interviewed over the years. , most in the wake of financial crises. “Plus, as central bankers try to clean up a mess of their own making and inflation and other crises rage, more chaos is ahead.”

How did we get here? A cult-like obsession with market economy. This creates a massive global distortion of reality: “The real economy – for the average worker – can be measured by productivity and results,” adds Prins.

“It behaves more according to traditional rules for money and economics. The financial market-based economy – does not. It has become a synthetic by-product of years of loose money, manufactured by central banks that grease the wheels of a system dominated by financial titans. This is why stock markets can soar in the face of a global pandemic and threats of nuclear war. It is also the reason why the real economy continues to lag behind the markets during financial, social and geopolitical turbulence.”

This is a must read if you want to understand the underlying misdirection of global economic policy. I wish I could say this was virtual reality, but it’s all too real for all but the ultra-rich.

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