Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

How Our “Mixed Economy” Created These Mixed-Up Markets

Stock-Markets / Stock Markets 2015 Sep 02, 2015 - 07:14 PM GMT

By: Investment_U


Alexander Green writes: Over the years, I have often waxed enthusiastic about the transcendent power of capitalism.

The free enterprise system has vastly improved our quality of life and raised our standard of living.

Entrepreneurs and business owners have given us safer transportation, faster communications, miracle drugs and medical devices, more powerful computers, and millions of new products and services that are better, cheaper and longer lasting.

This has benefited the wealth creators too, of course. Most rich Americans achieved their affluence not by inheritance or celebrity status but by starting and managing a profitable business.

Most of us don’t have the time, the investment capital or the experience necessary to found and run a successful company, but we can still own a piece of one through the quintessence of capitalism: the stock market.

With even a modest amount of money, you can accumulate a stake in many of the world’s greatest firms. True, the market has hair-raising ups and downs - as we have been reminded over the last few weeks - but the system works.

In my view, however, there is something different about this sell-off, a lurking fear that something is amiss with our free market system.

It starts with the fact that we really don’t have one. What we have is a mixed economy, one that features characteristics of both capitalism and socialism.

And the latter is hurting us.

Don’t lay all the blame on President Obama. In the 50 years between 1960 and 2010, entitlements exploded from 28% of federal spending to 66%. And the growth was 8% higher during Republican administrations than Democratic ones.

In particular, George W. Bush’s “compassionate conservatism” looked a lot like old-fashioned liberalism. Or, as one wag put it, Bush came into office as a social conservative and left as a conservative socialist.

His successor saw his reckless and irresponsible spending and topped it. When Obama came into office on January 20, 2009, the national debt was $7.4 trillion. Today it is $18.4 trillion. That debt increase equals more than $65,000 per household.

Yet Obama insists the “mindless austerity” of the sequester - which has brought down the size of the annual deficit the past few years - is hurting us.

These numbers don’t include our unfunded liabilities for Social Security, Medicare and Medicaid, which come to another $97.4 trillion - or $820,000 per taxpayer.

And here’s the bad news for those who sincerely wish we could make up the difference by raising taxes on “the rich.”

If the IRS confiscated the gross income of every corporation in the United States and the adjusted gross income of every American making over $66,000 per year, it would raise approximately $6.7 trillion. But that wouldn’t be enough to meet even the $8 trillion a year growth in these unfunded liabilities.

Most Americans could not seem to care less. Who is drawing the biggest and most enthusiastic crowds this political season? Bernie Sanders, a self-described socialist who proposes increasing Social Security benefits.

Hey, why not?

Democracies from Tokyo to London to Washington, D.C. all face the same intractable problem: elected representatives who are making promises they can’t keep and refusing to say “no” to runaway spending or the special interests who demand it.

Promising to cut benefits - especially for retirees and those nearing retirement - is seen as political suicide. Obama ignored the recommendations of his own bipartisan panel on entitlement reform. And so-called fiscal conservatives running for the nation’s highest office have offered up nothing substantial of their own.

Making matters worse, a report by The States Project - a joint venture between Harvard’s Institute of Politics and the University of Pennsylvania’s Fels Institute of Government - estimates that state and local governments owe yet another $7.3 trillion.  (Amazingly, taxpayers never approved the vast majority of this debt and most remain generally unaware of the extent of their obligations.)

In short, we are hurtling toward the most predictable financial crises in our nation’s history, one that can’t be solved with tax increases, modest reforms or stronger economic growth.

Most Americans realize that we have a budget deficit and a looming shortfall for entitlements. But what they don’t fully understand is the extent of the problem and the enormous threat it poses.

Yet the stock market has gotten a whiff of it lately.

We are now in a period of “administrative markets” where stock returns are affected as much by government policies as they are by economic growth and corporate profits.

In the last few years we’ve seen bailouts, fiscal stimulus, quantitative easing, zero interest rates, heavy-handed regulation, and sharply higher taxes on income, dividends and capital gains. Our corporate tax rate is the highest in the developed world.

This is distorting markets... and lately equity investors have been paying the price.

Given these difficult and unprecedented circumstances, what should you do with your portfolio now?

That’s precisely what I’ll cover in my next column. Stay tuned.

Good investing,



Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email:

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules