Book Review: Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever, by Nomi Prins
From the documented accounts in this book, Nomi Prins demonstrates that the stock market has little relation to, and even less impact on, the real economy where most people live. Although left brain bean counters will be right at home with the almost overload of quantitative information, readers without a financial background will also be able to follow these events that follow the money. Prins recounts event after event in which the markets are saved and usually come out stronger from financial melt downs such as that in 2008—while the real economy as measured by quality employment and financial security for those not playing the markets continues to decline. From causations documented in this book, Prins makes it clear that the real economy will never recover under this system. Increasing numbers of people are waking up to that every day—and they are starting to do something about it, including the use by some of digital currencies such as Bitcoin.
As implied in the book’s title, Prins asserts there is no going back. The author identifies five main emerging economic sectors that overlap in functionality, material, and skills needed to implement them: 1. New energy, 2. Infrastructure, 3. Transformative technology, 4. New money, and 5. Meta-reality (Metaverse and artificial intelligence). Prins also identifies the sectors that are attracting public/private infrastructure investment in the real economy, and those are: 1. Sustainable power, 2. Technological innovation, 3. Virtual collaboration portals, and 4. Revolutionizing of money itself.
Of the several points made in this book, a prominent take away is the complete separation of the markets from the real economy—that when there is news of the market doing well, one must remember that has nothing to do with the real economy. Let’s lean into the future and insist that all financial activity be put to genuine productive use.