Half the work that is done in this world is to make things appear what they are not.

E. R. Beadle

Altered Reality is now the new Reality: 

Central bankers have been actively employing psychological strategies to deceive the masses for generations.  In the future, we will write a more in-depth article on this topic. Central bankers have been recreating reality, and the poignant part is that the masses now assume that this altered reality is the new norm. 

By now, everyone is aware of Dan Price, who in his infinite wisdom decided to oppose market forces and attempt to create a new paradigm; his version of equality.   He decided to raise the minimum salary in his firm to $70,000. On the surface, you would think such a strategy would work…  Take from the rich and give to the poor; the modern day robin hood. In reality, the strategy was an utter failure; it rewarded the slothful the most, and the most fruitful the least.  As expected, the talented decided to jump ship and look for greener pastures.  In this scenario, an attempt to recreate reality was launched, but it failed due to its scale.    The Fed took the same path, only on a much larger scale and the result has been a success so far.  The Fed has been pumping money into the system via QE (through its various quantitative easing programs) and by maintaining an environment of ultra-low interest rates for an unusually lengthy period of time. QE has ended, but not the era of incredibly low-interest rates.  This gives many companies that have no edge and or very little of an edge due to lack of real effort a new lease on life.  They are able to issue debt and use this capital to create the illusion that all is well. In other words, they are getting a lifeline they do not deserve, via money they do not have, and will in many instances, never be able to pay off, to create the illusion that the company is prospering. Even companies that could improve their efficiency, and output are not doing so because it’s far cheaper to use this money to buy back their stock and inflate earnings, contrary to investing for future growth.   Insanely cheap interest rates have encouraged corporate and sovereign borrowers to issue an unmatched $253 billion worth of long-term debt as of July 2015; $65 billion more issued over the same period last year… Some of these bonds have maturity dates of 100 years. 

This quote from a recent article in the financial times sums up the current situation quite well.

“Take corporates. If they believed the economic outlook was positive and markets were distorted you might see them taking advantage by borrowing cheaply and then using that money to invest. But you’re not seeing that. They are issuing the debt and using the money to buy back stocks,” Mr. Gallo added. Full Story

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