Easy Money Fosters a World of Fatties, Free-Spending, and Fallacies

Easy Street.

It's where we all reside these days, as stocks reach new all-time highs on a regular basis, quarterly fund notices are eagerly awaited for the good news, and no calamity, disaster, data, or dictator can hope to stem the flow of money into the pockets of Wall Street brokers and their eager investors.

Easy Money.

That's the ticket to lifestyles of the rich and famous. What's known widely as the "wealth effect," has everybody giddy with the possibilities of bigger homes, faster cars, more lavish lifestyles. Why would anybody claim that these manufactured dreams are not for the best?

Because they're dreams, fallacies, shadow plays on the collective psyche of investors, which these days happens to include anybody with a decent job and a 401k retirement plan. TV ads show healthy retirees working on sports cars, opening wineries, bicycling along the shore of some deserted beach.

It's a facade for the real lives people live. More than a fair share of people are either in poor health, somewhat destitute, unable to decide between paying for medication or food, and the rents or mortgages on those "bigger homes" are increasing at an unsustainable rate.

Everything, from pickle relish to cell phone plans, is massively overpriced and planning on going higher. The very priests and priestesses of high finance = the governors of the Federal Reserve - tell us that they would like to see more inflation. Seriously. Higher prices... for everything.

Walk through any upscale supermarket and witnessed the blank stares of shoppers strolling and trolling the aisles, mesmerized by colorful labels and delicious deals. It's enough to make the whole country obese.

And it is. Nobody in the financial realm will admit it, but easy money is a leading cause of obesity. It's also a leading cause of mass stupidity. It takes no financial discipline nor anything more than basic math skills to suck up the profits from the font of Wall Street. It's intellectually dishonest and mentally disarming. It results in being massively unprepared for the present and especially, the future.

Easy money fuels the general degradation of society because of it's essential falsity. The money is conjured out of thin air - with a dabble of debt added for good measure - to buy minuscule portions of companies at prices one would have sneered at 20 years ago. Most people with investments don't even know which companies they own, how many shares of such or what the price to earnings ratio is of the underlying securities.

Is this rational? People have so much trust in money-changers that they don't even know what they own, or why. That's what's troubling. American investors have entrusted their futures to the same group of people who brought us the dotcom disaster, the sub-prime mortgage bubble and the Great Financial Crisis (GFC) of 2008-09. It's lunacy of a high order.

There's an old adage that goes, "you get what you pay for." Besides being an example of poor grammar (another sign of the times), there is the ring of truth to the expression. What people have paid for their stocks, their perceived riches, their assumed wealth, is small, yet they expect the returns to be great.

After fees, taxes and the great wealth destroyer of inflation, they're not likely to be very pleased when they cash out.

At the close, Thursday, October 5, 2017: (all record closing highs)
Dow: 22,775.39, +113.75 (+0.50%)
NASDAQ: 6,585.36, +50.73 (+0.78%)
S&P 500: 2,552.07, +14.33 (+0.56%)
NYSE Composite: 12,338.93, +34.26 (+0.28%)