I wish folks would wrap their heads around this simple concept the next time they want to argue the stock market is a good indicator of our economy’s health.
I could not agree more and it is incredibly dangerous because it's part of an agenda-driven plan to get the restivus to back-stop stockholder losses.
Neither stocks nor stock markets nor corporations are necessary for a fully functioning successful economy. Corporations are creatures of the State and functioned then as now: an extension of a State's State Department or Ministry of Foreign Affairs.
Stocks are merely one of a dozen ways for a company to raise cash.
No stock market crash has ever caused a recession and it isn't even possible. During the 1925 Recession, 1928 Recession and the 1960 Recession the stock markets set weekly record highs which totally contradicts claims that stocks are an indicator of anything.
At other times when the economy was growing at 12.5% GDP per quarter, the stock markets tanked.
The remaining times the stock market went sideways during times of growth or recession.
And the biggest lie of all:
"I lost money!"
They didn't lose one single penny.
You invest $10,000 at $10,00/share and the stock price jumps to $80,00/share then the market loses 42% of its value.
How much money did you lose?
$0.
Your $10,000 is still there unmolested.
That $80/share is just the theoretical value. When you sell it for $80/share only then does the theoretical value change to real value.
The problem is there are people who want you to reimburse them for the something they never lost.
www.bls.gov
