No. of Recommendations: 16
Can someone explain to me why the market is going up like a rocket?
The centralization and concentration of capital. In other words, the increasing monopolization of the economy and the corresponding concentration of wealth into an ever narrowing social base. The top 1% have seen their share of all wealth grow from 22.8% in 1989 to 32% today, while the top 0.1% have seen their share grow from 8.6% in 1989 to 14.5%. Any group outside the top 1% has seen their share of wealth decline.
Wealth needs to be stored and there are limited forms that can take. As all value investors know, the safest way to store wealth is in safe and predictable future income streams purchased at reasonable prices. That has meant buying whole businesses or fractions of businesses on public markets.
With this concentration of capital accelerating, the wealthy have fewer and fewer places to store these ever expanding hoards, thus the bidding up of every asset price. Even fictional assets like crypto become stores of value.
This is unsustainable, or rather can only be sustained by the continued looting of the 99% by the 1% thereby supplying the plutocracy with the expanded capital necessary to sustain ever rising asset prices.
While the economy seems to be humming along there are all sorts of clues that the society is broken. Collapsing fertility rates indicate a new generation of people have concluded that the reproduction of the species is individually irrational, young people have given up on the idea of home ownership, and everyone is being told that education is a waste of money and a pointless endeavor in the face of an AI future.
The disconnect between the top 10% and the bottom 90% is cavernous, indeed the instruments of social, cultural, and political power are as concentrated as economic power such that any communication between the needs and concerns of the bottom 90% to the ruling class is nearly impossible. Trumpism is but one bleating plea from the voiceless middle classes who blame their shrinking status on their lesser countrymen.
This will continue until wealth is so concentrated that its extraction from the bottom 90% no longer suffices to bouy asset values, or until the bottom 99% realizes that wealth has always been common and an age of the new commonwealth is necessary for our collective survival.
Either way, it’s going to burst.
