Thursday, September 24, 2009

Obama's Incredible Wealth Creation

Robert Reich -- who is perhaps the straightest shooter out there, in my opinion -- has an interesting column on the Huffington Post noting the large stock market gains during Obama's presidency, which is a little weird seeing as how the economy is supposed to be down and consumer's aren't spending.

So who is spending? The US government. They're providing credit where the private market isn't.

How much wealth has been created in the stock market since Obama's inauguration? About $2.83 trillion, according to the Wilshire 5000. That's only in 8 months. The government has spend a fraction of that in that time, so this would seem to be a good deal (sort of).

So while all those Tea Baggers are out protesting the expansion of government, it's been precisely this expansion that is behind the large increases in their 401Ks (if they own them) since Obama became president. Reich writes:
In other words, the Dow is up despite the biggest consumer retreat from the market since the Great Depression because of the very thing so many executives are complaining about, which is government's expansion. And regardless of what you call it -- Keynesianism, socialism, or just pragmatism -- it's doing wonders for business, especially big business and Wall Street. Consumer spending is falling back to 60 to 65 percent of the economy, as government spending expands to fill the gap.


Anonymous said...

Yes, but it's all on borrowed money. Money that the tax payers (especially our children) will have to pay back.

Thus it's not really wealth creation. Just another transfer of income from tax payers to wall street.


rhhardin said...

The sudden collapse of the left as one system after another is destroyed is probably the story of the year, if Belmont Club has the right intuition.