I’ve posted Entry #46 to my weekly Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called Bull Markets Increase Government Power.
Juicy Excerpt: People are always going to turn to government in times of crisis. Government is big enough to offer protection from big scary developments. So those of us who worry that government has grown too big should never want to see stock prices rise so high that the return to fair value is sure to bring on an economic crisis.
Conservatives should want as big as possible a percentage of the wealth created by a society to go to the members of that society that did the work that generated that wealth. This is not what happens in a bull market. In a bull market, economic rewards are distributed in an arbitrary fashion. Those who happened to be born at the right time to participate in the benefits of the bull become enriched regardless of their contributions while productive workers can lose most of the accumulated wealth of a lifetime for no good economic reason.
And none of us can plan our economic affairs properly during bull markets. Bull market gains are temporary wealth. Our belief in the temporary wealth causes us to spend money we wouldn’t spend in ordinary circumstances. And our careless spending rewards businesses that wouldn’t be able to hack it if not for the billions in funny money being directed their way.
This is capitalism? This is how we want to see markets work? This is a conservative economic policy?