The fallacy is the nebulosity of an imagined power called the "market". We have heard, "let the market decide". The market decides nothing. Industry decides. What we are doing is letting those who profit decide how to make more profit for themselves. It is not working very well today as we see the profits go to the top few percent and the rest of us hold the bag. Folks, we are being duped. It isn't trickling down. Why shouldn't all of us share in the bounty? I know, this will bring out the "S" word, the "C" word or even the "L" word. The fact is the powerful have played a psychological trick on us making us condemn ourselves into poverty.
Capitalism has moved into a new phase. It helped build our great country when resource were plentiful and environmental concerns were much smaller. Our country is past the expansion and building phase. Resources are not as plentiful. There are many environmental problems ahead of us. Capitalism has no mechanism to consider these things, it is simply a wealth machine for the affluent. That is why we must depend upon the government. If we do not get a handle on these problems and find a way for all to share in the Earth's bounty there will be declining living conditions and consequent social upheaval.
If the only way to slow environmental damage and global warming is for restrictions to be placed upon fossil fuels, then we must do it. The "market" is not going to solve the problem.
If you want the rich to stop getting richer then get Obama and Bernanke to stop their economic policies.
Anyone with any financial knowledge knows that this is an inflated stock market propped up by the Fed's policies. It will make the rich richer, because they have the stock portfolios. Chances are you may have a 401k and your portfolio went up too, but you didn't start with as much and most likely are in funds.
So the rich guy with the big home who employs X number of people to run it and walk the dogs, gets richer by letting his stock go up.
And no he has no reason to hire any more 'help'. He already travels and employs planes, trains and automobiles, sleeps in expensive beds and dines at expensive restaurants, but he always does that and most likely won't be spending his extra stock money. He's got the horses and the trainers. And he's leased the back 40 to Joe, who farms it. Each of the grandkids has a car and an education. And he's paid more attorneys and accountants than he can count.
So he just sits back and lets Bernanke play with the economy, when bottom falls, well he's got a broker and a stop loss order to take care of that.
This particular type of policy wasn't designed to make you and me rich. Bernanke has stated many times it would increase the stock market. If your in, you did well and your stop loss orders are in place because most don't expect it to last once the quantitative easing stops. Remember last month when Bernanke even hinted he was going to start pulling back? The market dropped like a stone.
Corporations know this. They know the books are inflated by these policies. They know if the hint caused the market to drop as much as it did, the reality would really hurt. They can't afford to lose operating cash because they used inflated dollars out of the market.
No, they not spending that money. That money won't get spent until it's back in our pockets. That can't happen until the Fed changes it's policies. That's why this recession has lasted so long. That's why 77% of new jobs created are part time.
The market works unless the government gets in the way as it has done in the last 6 years.