These facts are being treated as grand mysteries by most commentators. But may I invoke Occam’s Razor and suggest the simplest explanation is the right one: There’s not enough stuff going on in the economy that’s worth investing in.
As the amount of money in the financial markets grows compared to the amount of worthwhile investments, it’s like having more and more rich people standing on a shrinking platform. Of course financial markets become more volatile, and begin panicking in response to what would have seemed, in earlier decades, like no big deal. I don’t think it’s a coincidence that the era of rising inequality and massive shareholder payouts has also been the era of rapidly rising and wildly swinging stock markets
I like the picture of “more and more rich people standing on a shrinking platform” maybe because eventually some will fall off and finally realize how the rest of us live. Now don’t get me wrong, I don’t have any animosity towards towards people making money. While I am not rich by many standards I do have enough to live comfortably in my chosen lifestyle of simplicity.
I do agree that there is just not enough stuff going on in the economy that’s worth investing in. If it doesn’t have something to do with terrorists or our military it is just not getting any attention now days. No potential jobs producers seem to want to risk their capital on something that is not a sure thing. In that regard they seem as fearful as the population in general. We just now seem to be a very risk averse country for the most part.
With the Feds holding interest rates at essentially zero does not invoke a sense of venturing into new territories. Interest rates near zero was not something that most, including myself, envisioned when we retired. I worked hard and lived a simple life during my earlier years so I could have a satisfying and secure retirement. When I retired interest rates were around 5% and been pretty much there for many years. And then the Feds took that away. There is just no safe place to put my earnings now except under the proverbial “pillow”. I’m not rich but even I don’t have any thing to do with my hard-earned gains from the employment years.
So, the super-rich 1%ers are essentially putting their money under their pillows and that doesn’t do the rest of us any good …