Monied People

The “Market” as Monied People

Economists talk about “the market” as if it were a weather system—something that happens to us, with its own moods and mysterious logic.

• Journalists write: “The market reacted negatively to the jobs report.”
• Economists say: “Market sentiment is bearish.”

But in reality, the “market” is not a thing.

It is a shorthand for the collective behavior of people who have money to spend. It does not even mean the ultra-rich nor hedge fund managers.

It just means people with disposable income—the monied.

The market is monied people are people who have money to spend on tradeable things that they believe will rise in value such as stocks, real estate, crypto, collectibles.

So the phrase:

• “The market reacted negatively to the jobs report” simply means that monied people did not like the report on how many people are being employed.
• “Market sentiment is bearish” means that monied people feel hesitant about buying.

Policy Implications

If a market downturn is just a shift in the behavior of the monied, then the standard policy response—cutting interest rates to encourage more asset buying—is misguided.

The first step is to find out what is the cause of the behavior shift.

• Is it because supply has problems, such as a war that stops logistics?
• Is it because demand has permanently declined, such as in emigration after a natural disaster?
• Is it because the government has sacrificed an industry in favor of another one?
• It is because the financial industry has made transactions more expensive?