DONALD TRUMP is fond of pointing out that the stockmarket has reached many record highs under his Presidency. It is a capricious measure to boast about, and one that may not fully reflect the concerns of those who voted for him and probably care more about real wage growth. And a look at the ratio of stockmarket capitalisation relative to GDP shows that this measure is close to a record high. And that led me to reflect on a sentence I wrote a few years ago: we are better at creating new claims on wealth than at creating wealth itself.

That sentence was written in the context of the huge rise in debt in the 40 years leading up to the 2008 crisis, and on the multiplication of obscure financial instruments that preceded it. It reflected the huge rise in the economic role of  the finance sector, and the wages of those who work within it. But it also relates to the way that the...Continue reading