Wall Street Speculative Fever: The Terminally Sick System

Over the past year, the global financial system, and especially Wall Street, has suffered from speculative mania unprecedented in economic history. Therefore, two questions immediately arise: how did we come to this and what are the consequences?

In March 2020, as the COVID-19 pandemic began to take its toll and workers began insane strikes and strikes, demanding sanitary measures to protect their lives and the lives of their families, financial markets plummeted.

In this archived photo, dated October 14, 2020, pedestrians walk past the New York Stock Exchange in New York. (AP Photo / Frank Franklin II, file)

Wall Street feared that any effective public health measures to contain the spread of the pandemic could lead to a collapse in overpriced financial assets, especially stocks, which rose from trillions of dollars injected into the financial system by the Federal Reserve government. (Fed) and other central banks after the 2008 crash.

The US government and the Federal Reserve have once again rushed to the aid of Wall Street. The Trump administration orchestrated multi-billion dollar corporate aid under the CARES Act, while the Federal Reserve stepped in to provide multi-billion dollar support to the financial sector, including, for the first time, stock purchases.

Since then, based on this ongoing $ 4 trillion intervention, with the Federal Reserve continuing to buy more than $ 1.4 trillion in financial assets a year, the world has witnessed an unprecedented orgy of financial speculation.

Wall Street’s major stock index, the S&P 500, is up about 88 percent from its March 2020 low, hitting multiple highs throughout the year. The margin debt used to fund stock speculation has hit an all-time high. And the yields on higher-risk bonds for the lowest-rated companies on the brink of default fell to historic lows.

But the most egregious expression of this speculation has been the boom in the cryptocurrency market. The most famous cryptocurrency, Bitcoin, has surged 600 percent over the past year. It rose from $ 7,000 to $ 54,000, peaking at $ 65,000 in the middle of last month.

Coinbase, a cryptocurrency exchange, launched on Wall Street last month, which saw the company’s market value rise to $ 85 billion from $ 8 billion in 2018, surpassing the valuation of some of the world’s top banks. the NASDAQ stock exchange on which it was launched.

However, in recent days, even the level of bitcoin speculation has been overshadowed by another cryptocurrency, Dogecoin.

Created in 2013 as a joke. Although Bitcoin proponents insist that it has some intrinsic value because it can be used to organize financial transactions without the intervention of a bank or other third party through a large system. Blockchain ledger, no such insurance is provided for dogecoin.

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