The United States has been hostile to capital formation since at least the Sixties, when high corporate tax rates and the “I see money, gimme” attitude made it impossible for investment to come from shareholders. Since then, the primary method for creating capital assets has been to borrow the money — both payback and interest are income tax deductions like any other expense, where income from sales that might be used to fuel expansion is taxed heavily.

The result is disconnection between the stock market and anything resembling real “investment”, which is and only is capital formation. Corporations no longer pay dividends much, because the dividends are income to investors and taxed as such, and people who buy stock are primarily investing in the stock market itself, not in the underlying companies and their productivity. Yes, the market responds to company profitability, but it isn’t directly related to companies’ efficiency in using capital assets, it’s strictly according to “indicators”.

That’s not a stock market, it’s a casino.

The <sneer>stimulus</sneer> was almost entirely delivered to the stock market and the money-shuffling “industries” that hang on it. As a result, Wall Street is doing fine, where the rest of us are being laid off and losing our houses. Goldman Sachs is highly profitable and paying out big bonuses — which they’re supposed to do when they’re profitable — but none of the money is being used to build factories for us to work in. It’s all being used to swap money around among the “investors” who have nothing to do with capital formation, only with money management.

It’s kind of an odd thing to see coming from the political Party and its supporters who announce themselves as Defenders of the Common Man Person, is it not?

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