The output of Yankee capitalism in 2020 is down in investment and employment. In the world of the real economy, most corporations have lost 25-30 percent. Yet the stock market is at an all-time high.
How do we explain this? It’s a direct result of the Fed’s injection of credit to banks and zero interest rates. In addition the banks have not reinvested in the real economy but speculated on financial assets. The fictitious wealth produced is only a bonanza for the wealthiest firms. For middle level firms, their stocks are not doing well. Michael Roberts predicts that the chickens will come home to roost sometime in the middle of this year.