RW: Are we then facing a bubble? Do you
sense that this flood of money, which is
clearly going largely into financial
assets
including the stock market, and boosting
it up so that we get this bizarre
contradiction that so many people
write to me about.
The collapsing economy on Main Street
all around them,
the 52 million people filing for
unemployment compensation,
and a booming stock market that has
basically recovered from the crash of
March. Is this a bubble? Will it collapse?
What is it we're seeing?
NP: It is a bubble and it will collapse.
And that we have already seen from 
the prior crises and
sub-crises of of this century so far. 
And the reason
for that is because
the money that's being created itself is
is going so quickly
into financial assets. And that's not
just the stock market. The stock market's
kind of the most
apparent disconnect between the
real economy because we know
that a lot of people won't get back into
their jobs, a lot of people will still be
losing their jobs,
foundational economies and small
businesses have been
ruptured to such an extreme extent that
the amount of money that has been
flowing into the stock market, even if it
were to be recalibrated,
doesn't have the time to help the real
economy in the current structure,
in the current system. So therefore it
continues to bubble up because
all the actors (the banks, the hedge funds,
the private equity funds,
the wealthy, the people that dabble in
the stock market even)
are collectively pushing up that value
and that's why we see,
for example, that the NASDAQ, the
representative of the technology stocks,
(and there are some merit, they do
help people do things from home)
but on the flip side of that there's a
ton of money going into them and
creating new records. And that's why the
DOW is up to almost where it was 
before the pandemic.
That is a bubble. It does not
represent
the real economy. It doesn't even
represent where the real economy is
going to be
in any sort of near future. And on top of
that we have a bubble in debt.
Debt was already high. Public debt was
already high.
Corporate debt was already at record
highs before this year began. Now we 
have a situation where because of
the Fed and because the private 
banks want to
make their money in fees for creating
deals with their corporate customers )so
at least somebody can make some money while some of them are closed)
they are borrowing more debt. So as a
result, in the first half of this year
the larger corporations in this country
have already borrowed more
because of the Fed's policies, because
the Fed has said that they will be there
to help them if they need it
(not just the government: the Fed) they
have been able to blow up their debt
by as much in these six months as the
entire year last year, 
which was already a record.
That is also a bubble.
Bubbles with nothing beneath them
at some point pop. 
And that's what we'll see. And it
might pop because another wave of the
coronavirus, the same wave bigger,
something else that we haven't seen yet, 
or the general sort
of deluge of this debt coming out of the
bubbles that it has been
inserted into. And these are problems
because we're not repairing, we're not
viewing, we're not looking at long-term
strategies
for the real economy, particularly in
crisis but even beyond that.
