The modern stock market and the birth of a Fiat aristocracy.

The modern financial market is a welfarist recipient of central banking interventionism.

I postulate that the financial economy, as we know it today, is but a parasitic outgrowth of the FIAT monetary regime that emerged after the collapse of the Bretton Woods Agreement in 1971, and marked the tragic end of the last vestige of 3000 years of hard money standard.

US dollar purchasing power since the founding of the Fed

The financial sector and its intermediaries ( Stocks and bonds markets) have directly benefited from the new Fiat "Dollar" standard. Knowing the effect of Fiat inflation on the economy, it may be assumed that the Financial economy has siphoned actual wealth and resources from the real economy due to its privileged ties with the banking system. Meanwhile, the productive economy has stagnated, resulting in a gradual decline in living standards for most of the population and an unfair enrichment of a privileged “ FIAT ARISTOCRACY”.

Financial securities are created “ ex nihilo” ( out of nothing) by investment banks just like commercial banks issued credit. Both issues get their value from “legal” and political coercion rather than natural market "Trust” in their ability to maintain their value and worth over time.

Fiat credit creation unfairly benefits securities issuers and holders in an inflationary regime because of the Cantillon effect loop. Central Banks are mandated to purchase financial securities and debt instruments to issue credit to the banking system. This direct intervention benefits the securities economy, the stock market, and financial intermediaries ( bankers, lawyers, investment professionals, and large shareholders). They receive the money first, while the rest of the economy suffers from debased purchasing power and capital malinvestments.

The modern financial economy and its stock market, in particular, are not the byproduct of real savings-growth-based economic demand for financial securities but rather the corrupted beneficiaries of a Central Banking's debt-driven economic regime. This implies that the stock market’s performance is influenced in large part by inflation rather than traditional economic indicators and companies’ qualitative factors.

It is hard to believe it given the scale of the propaganda promoting otherwise, but the stock market and the financial economy, as we know it today, are not a byproduct of Free market Capitalism.

In a relatively sound economy driven by real capital savings and sound money, financial intermediation and securitization would play a fairly minimal role in the financing of the economy. Most companies would be financed by equity and bank credit while securities issuance would be greatly minimized. This also implies that in a sounder financial system, bankers, lawyers, financial professionals, accountants, and other intermediaries wealth and prestige would be greatly diminished.

Therefore, a rising stock market is, contrary to the propaganda, a sign and symbol of an unhealthy economy depending on unrestrained credit injection and capital misallocation. This short-sighted approach encourages entrepreneurs and investors to prioritize short-term speculative activities to increase the value of their securities, instead of focusing on establishing sustainable, long-term businesses with the potential for consistent profitability.

2009 marks the beginning of the golden age of central bank welfarism to support the stock market.

logically, hyper-securitization creates incentives that lure malevolent pseudo-operators seeking quick riches. The market becomes saturated with fraud, deceptive accounting, white-collar criminal groups, pump-and-dump scams, and a wide range of unethical actions that undermine the financial system’s stability. This necessitates ongoing monitoring and intervention by Central Banks and governments.

In the end, the modern financial market is far from a natural evolution of the financial division of labor, but rather a compromised establishment subservient to special interests whose wealth and prestige depend on. Today’s economic and entrepreneurial elite is much more fragile than their predecessors due to the erosion of equity-wealth by the debt-dependent financial economy. In all, the net beneficiary of this system is ultimately the State and its bureaucracy whose influence and control grows incrementally with every bailout and every intervention.