Why Didn't the Stock Market Crash After Joe Biden's Presidency?

Many were predicting a market crash after Joe Biden was elected, much like what Donald Trump anticipated. However, the market didn't crash as expected. The reasoning behind this phenomenon is not as mysterious as it seems, especially when we consider the role of various socio-economic factors.

Introduction to the Concept of 'Free Money'

At the core of the non-crash is the widespread distribution of what many describe as 'free money.' This money, often labeled as socialist programs, was a direct result of government interventions to mitigate the economic impacts of the virus crisis. This 'free money' provided individuals with means to continue spending, even when their usual financial streams were disrupted.

The Role of Vast Economic Support

The virus crisis manufactured by global authorities was a pivotal moment in modern history. Governments worldwide, including the United States, initiated massive financial support through direct stimulus checks, unemployment benefits, and other economic relief measures. These initiatives ensured that people had disposable income to continue purchasing goods and services, thereby supporting the economy and the stock market.

Maintaining Market Support Through Continued Fiscal Stimulus

While some individuals used this 'free money' to purchase unnecessary items, others invested in the stock market. This dual action of consumption and investment maintained market stability. Investors, using this influx of 'free money,' bought stocks, which in turn supported the overall market. This feedback loop created a self-sustaining environment where the market continued to rise.

The True Test of Fiscal Sustainability

The true test of this market stability will be when fiscal support diminishes or is no longer available. If the 'free money' stops, and the economy relies solely on the intrinsic value of stocks, a market correction is inevitable. Investors who have accumulated wealth might need to liquidate their holdings to meet immediate financial needs, leading to a potential crash.

Reflections on Past Market Crashes and Recovery

Recalling the 2020 crash caused by the virus, the market quickly rebounded. This rapid recovery was fueled by similar interventionist policies, including 'free money' distributed through economic relief measures. The market's resilience demonstrates the power of such fiscal stimulus. In contrast, the 2008 financial crisis saw a more prolonged recovery, as the market corrected itself due to the lack of similar intervention.

The Future of the American Economy

Some have expressed concerns about the long-term sustainability of the current economic model, particularly under Joe Biden. The focus on 'free money' has raised questions about the future stability of the American economy. Critics argue that the current approach may not be sustainable in the long run, as the government cannot continue to print money indefinitely.

The overarching concern is that as both government support and individual expectations of 'free money' diminish, the market may face a significant correction. This change could fundamentally alter the financial landscape, potentially leading to a collapse of the current system. Such a scenario would be unprecedented, given the rapid growth and stability of the market in recent years.

While many attribute the continued market growth to a collective 'shock' of 'free money,' this phenomenon highlights the cyclical nature of economic policies and market corrections. As the 'free money' tide recedes, it is crucial for investors, policymakers, and individuals to prepare for the potential receding of the current economic environment.

Conclusion

In conclusion, the failure of the stock market to crash following Joe Biden's presidency can be attributed to the widespread distribution of 'free money' and the sustained fiscal intervention by the government. The true test will be when this support is no longer available. The market's future stability remains uncertain, and it is vital for stakeholders to be prepared for potential market corrections.