Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever

The real economy is based on productivity and results, while the other is a product of loose money and financial titans. This has led to a polarized world of the mega rich versus the never rich, and can never return to normal.

Format: Hardback
Length: 352 pages
Publication date: 11 October 2022
Publisher: PublicAffairs,U.S.

The world is undeniably divided into two distinct economic realms, each with its own unique characteristics and dynamics. The first economy, which serves as the foundation for the average worker, is built upon the principles of productivity and tangible results. It operates according to the traditional rules of money and economics, with a focus on generating wealth and fostering economic growth. In contrast, the second economy emerges as a result of years of loose monetary policies implemented by central banks, aimed at stimulating the economy and mitigating the effects of financial crises. This second economy is characterized by its dominance by financial titans and a reliance on unconventional monetary measures. It possesses an extraordinary power to elevate stock markets, even in the face of global pandemics and threats of nuclear war.

The roots of this departure from reality can be traced back to the emergency response to the financial crisis of 2008. The implementation of quantitative easing, a policy that involved the injection of vast amounts of cash into the economy, particularly by major Wall Street banks, marked a significant turning point. Initially intended as a short-term solution to address the crisis, quantitative easing quickly became a habit, then a compulsion, and eventually an addiction. This reliance on monetary stimulus not only failed to address the underlying economic issues but also perpetuated a cycle of debt and financial instability.

Nomi Prins, in her groundbreaking work, relentlessly exposes a world fractured by policies crafted by the largest financial institutions, led by the Federal Reserve. Through her meticulous research and incisive analysis, Prins uncovers a newly polarized world of the mega rich versus the never rich, the winners and losers of an unprecedented distortion that can never return to normal. The wealth gap has widened to unprecedented levels, with the top 1% holding an astonishing 50% of global wealth, while the bottom 50% struggle to meet their basic needs. The consequences of this economic imbalance are far-reaching, extending to social and political realms. The growing divide between the haves and have-nots has led to increased social unrest, political polarization, and a loss of trust in institutions.

The power of the second economy is evident in its ability to withstand the challenges posed by global crises. Despite the devastating effects of the COVID-19 pandemic and the ongoing threats of nuclear war, the stock markets have remained resilient, buoyed by the unfettered financial speculation and the interventions of central banks. However, this resilience comes at a cost. The financial system is vulnerable to shocks and instability, and any missteps or unforeseen events can have catastrophic consequences for the broader economy.

The time has come for a reassessment of our economic policies and a shift towards a more sustainable and equitable system. We need to prioritize the well-being of the average worker and address the root causes of economic inequality. This requires a comprehensive approach that includes measures to promote productivity, invest in education and infrastructure, and regulate the financial sector to prevent excessive speculation and protect against systemic risks.

In conclusion, the world is divided into two distinct economies, each with its own unique characteristics and dynamics. The first economy, based on productivity and results, serves as the foundation for the average worker. In contrast, the second economy, driven by loose monetary policies and financial titans, has emerged as a powerful force capable of elevating stock markets even in the face of global crises. While the second economy has its benefits, its reliance on monetary stimulus and financial instability has led to a widening wealth gap, social unrest, and political polarization. It is time for us to recognize the flaws of this system and work towards a more sustainable and equitable economic future.

Weight: 560g
Dimension: 164 x 241 x 35 (mm)
ISBN-13: 9781541789067