The New York Times -March 30, 2013
The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.
Over the last 13 years, the stock market has twice crashed and touched
off a recession: American households lost $5 trillion in the 2000
dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner
or later — within a few years, I predict — this latest Wall Street
bubble, inflated by an egregious flood of phony money from the Federal
Reserve rather than real economic gains, will explode, too.
Since the S.&P. 500 first reached its current level, in March 2000,
the mad money printers at the Federal Reserve have expanded their
balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during
that stretch, economic output has grown by an average of 1.7 percent a
year (the slowest since the Civil War); real business investment has
crawled forward at only 0.8 percent per year; and the payroll job count
has crept up at a negligible 0.1 percent annually. Real median family
income growth has dropped 8 percent, and the number of full-time middle
class jobs, 6 percent. The real net worth of the “bottom” 90 percent has
dropped by one-fourth. The number of food stamp and disability aid
recipients has more than doubled, to 59 million, about one in five
Americans.
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