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Force Majeure Markets~ How long can this Alice in Wonderland Market ignore the numbers?
The CPI is down from 15% in 1980 and 13% in 2008, when the Fed began to put the brakes on in terms of its discontinued M3.
http://www.shadowstats.com/alternate_data/inflation-charts
Since at least 1980, US Government economists defined the CPI down.
This not only kept Cost of Living government and military payrolls and pension benefits down.
It also disguised the fact the American standard of living declined since the 1950s, when a single wage earner could support a large family and the good middle class lifestyle.
Since then, with 12 cents a gallon gasoline and 12 cent hamburgers, wealth basically transferred to fat cats who received as much as 365 times the wee middle folk.
The difference between rich, middle class and poor income was higher than in 1929 before the first Crash.
Not everyone knows there were multiple crashes during the Great Depression, culminating in the 16-year crash of 1966 in real terms, some 37 years later when market prices returned to 1929 prices in real terms.
http://stockcharts.com/charts/historical/djia1900.html
Free markets figure out inflation and price assets accordingly lower for higher real interest and dividend yields. As we have not had free markets for a few interesting years, many ignored this fact.
Third, Unemployment
The ultimate value of the free market economy is it manages price in a way that rewards competitive work with returns balancing demand and supply for the best and the most, Jeremy Bentham’s utilitarian principle.
What is sometimes forgotten about Bentham, who learned Latin at Three and entered Oxford at 12, is he was a lawyer frustrated with the complexity of legal code that was not entirely based on moral principle.
