Most Americans Believe the Economy Is Rigged; They’re Right
Do you believe the economy is “rigged?”
If you do, you’re not alone.
A new poll by Marketplace and Edison Research found that a staggering 71% of Americans believe the economy is rigged.
The poll based its findings on answers to this question: which of the following comes closer to your opinion on the economic system in the US?
- The economic system is rigged in favor of certain groups
- The economy system is fair to all Americans
- Don’t know
Rigged was the dominant answer across all demographics – black, white, Hispanic, Republican, Democrat, and independent. According to CNNMoney, the poll supports what it hears from everyday Americans:
The majority feel the American Dream comes with huge asterisk that reads ‘only for the favored few.’…Americans have good reason to think this way. The typical middle class family is earning about the same amount of money — just under $54,000 — as they did in 1996, once you adjust for inflation. That means a lot of people aren’t getting paid more. On top of that, the Great Recession knocked out many people’s safety net savings as they lost jobs or homes or both. Even people who have jobs tell CNNMoney that they feel one step away from financial ruin. They fear a life of ‘dead-end crap jobs with crap wages.’”
The sentiment on jobs certainly reflects reality. Despite persistent media spin about “strong employment numbers,” the truth is the economy has added primarily low-paying, part-time work.
But when you talk about the economy being “rigged,” what does that really mean? How do the riggers do it? The poll likely reflects a general sense that something is wrong in the economy, but the average American on the street probably won’t be able to articulate exactly how the economy is rigged. They just innately know something is rotten.
It’s really no mystery. Americans watch those responsible for rigging the economy every night on the evening news. They pull levers for them every election day. They reflexively put their faith in the rigging institutions.
It’s the central bankers and the politicians.
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In the wake of the Brexit vote, the Federal Reserve issued a statement:
The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the US economy.”
There’s your rigged economy.
Central bankers manipulate interest rates and print money to enable government borrowing and spending. They pump up bubbles, watch them pop, and then blow up new ones. Last spring, Yahoo Finance reported on research that showed 93% of the entire stock market move since 2008 was caused by Federal Reserve policy. In an interview on CNBC World Now last January, Peter explained how Fed monetary policy inflated a stock market bubble to engineer a fake wealth effect:
The Federal Reserve is the reason the market is so high in the first place. They inflated it. They did it deliberately to engineer a wealth effect. It’s phony wealth, unfortunately. When you create phony wealth with a stock market bubble, the result is substantial malinvestment. You encourage all sorts of uneconomic activity to take place. You get rampant speculation.”
Jim Grant recently made the same point using an analogy involving Janet Yellen coaxing a cat up a tree.
I think with respect to the asset markets we can imagine a little kitten up at the top of a tree…We might label this kitten ‘stocks, bonds, and real estate.’ And one might imagine a fire-lady named, say Janet, at the top of the ladder saying, ‘Hey little fur-ball, how’d you get up that high?’ So central banks have coaxed and manipulated asset prices higher. They have succeeded not at all in coaxing or manipulating activity higher.”
And therein lies the rub. While speculators and investors cash in on the short-term phony wealth, it does nothing for the actual economy. As Grant put it, they’ve put the horse of speculation is ahead of the cart of enterprise.
Everyday Americans get left behind.
They are right. There is a rigged economy.
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