Thursday the Federal Reserve said it would begin buying $40 billion worth of mortgage secured bonds each month until the unemployment rate fell and the economy showed a more vigorous recovery. At the news the stock market soared back to 2007 levels.
Stock market rises are fueled by people with money; that top 1 percent that both President Obama and candidate Mitt Romney represent. (Romney in spades.)
The Dow Jones Index has been rising all year. It is reasonable to suppose that rich people are buying stocks because they believe the economy is recovering and will continue to do so. Increased investments in the U.S. economy are the most meaningful, most sincere, statements of confidence that rich people can make.
But there seems to be a disconnect here. The rich people and monied institutions that are investing more and more in securities are all very much aware that President Barack Obama will continue to advocate a return to Clinton-level taxes on the wealthy if he is re-elected. They also know that a rising stock market signals economic growth. If the economy continues to grow and employment picks up, the president stands a better chance of re-election.
So what gives? Are the rich deliberately working against their own best interests by bolstering the economy? Or, just maybe, do they remember that when the income tax rate was a little higher that the federal budget was balanced, unemployment was much lower and prospects for the nation were far brighter? Perhaps they concluded that betting on America by purchasing stock in American industry was wiser than playing negative politics with their dollars.
Just a thought.
— Emerson Lynn, jr.
