The FT has this headline this morning:
The claim is then made that:
[The] S&P Global's Purchasing Managers' Index on Wednesday, ... surprised Wall Street by showing business activity in September accelerating at the fastest pace in five years.
The report reinforced a view that the world's biggest economy continues to run hot, driven by a booming stock market and huge investment in AI. The Atlanta Fed's GDPNow tracker forecasts that the economy will grow at an annualised rate of 5.1 per cent in the third quarter.
So let me stand back for a moment and suggest what this uncritical and, I think, desperately poor report from the Financial Times is really trying to say.
At its core, the message is that AI euphoria is so mad that it is now not just infecting US stock exchanges, whilst massively distorting the allocation of capital resources within the US economy towards a purpose which appears to have no useful human goal and might be entirely destructive, but is simultaneously providing those who are riding on the back of the supposed wealth it is creating with the power to consume on such a scale that the US Federal Reserve is going to have to push its interest rates ever higher, dragging those in the world behind it, so that the excess of this industry will be translated into punishment for all those who are living beyond the AI bubble, meaning that those without financial wealth but who are possessed of mortgages, credit card debt, car loans, or who pay rent, will be forced to pay the price for this madness whilst it is going on, just as those who now think they are rich as a consequence of it will demand state bailouts at cost to the majority in their society when, as is inevitable, the bubble bursts.
Please do accept my apologies for the previous, extraordinarily long, 191-word sentence. It does, however, express my interrelated feeling about the madness that we are facing. I dictated it as an inexorable flow, and I think it deserves to remain that way.
The fact is that the AI economy, AI itself, stock markets, and those who supposedly head the US economy have all lost touch with reality, as have the incredulous FT reporters who use this article to repeat Donald Trump's claim that the US now has the hottest economy in the world, whilst simultaneously speculating about for how long the sell-off of government bonds can continue around the world, which they do not appear to realise does, within the current framework of economic thinking, threaten the credibility of government itself, and all that it is meant to do, creating a pathway to fascism as a consequence.
If this is the sort of unthinking nonsense even the FT can now produce, people's scepticism about the mainstream media, which I commented on yesterday, is entirely justified.
The FT should have been screaming that we need to stop this madness, because that is what it is. Instead, they are not only celebrating it, but they are not noting its consequences for the vast majority of people in the world, and are doing that with what I think to be a sense of indifference because they believe that their allegiance lies with those who appear to be gaining at present, even though any sane observer should understand that this economic madness cannot continue.
I am despairing, but it's Saturday, so I am heading out for birdwatching and coffee. I think I need them.
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Buy me a coffee!
I do agree. I hope you enjoy your bird watching and coffee.
I’d like to highlight the difference between the 5.1% growth in the US and the anemic growth of around 1% in the UK and other countries.
Undoubtedly the US is “running hot” for the reasons you give and I certainly expect a crash which will affect, and punish, far too many innocent bystanders.
But part of the reason for the growth in the US, apart from the AI bubble, is the growth in the US government debt that is so worrying “the markets”. In the US, over the past decade, inflation adjusted growth in GDP has averaged about 2.4% per annum. In the UK it has averaged about 1.1%, a tad higher than the Eurozone average of 1.0% and much higher than the German average of 0.5%. Over that same period debt to GDP has increased by 22% in the US to 122%, in the UK by 18% to 102%, but in the EU by minus 1.4% to 88% and in Germany by minus 9% to 63%.
There are many reasons for differences in GDP growth. Undoubtedly the US growth has been flattered by AI spending. However, the difference between Germany and the US is particularly stark. In German government debt, and therefore government spending, has shrunk from a relatively low base and growth has been terrible. By contrast in the US government spending as grown a lot, although perhaps not in a good way, and growth is very high.
Conventional neoliberal economics says that government spending and “debt” is bad for the economy and must be reduced. The figures, in line with MMT, say otherwise. Growing government debt seems to correlate positively with growth, not the other way round as we are supposed to believe.
The US government has been good new-Keynesians. The US government has spent money and financial markets have benefited enormously from it. Very little has been said about how this is wealth has excluded vast parts of society. They assume everybody is equal and everybody benefits equally as a prior.
But at least we were spared the “chaos of Corbyn…” and the “socialism of Sanders” or the “rubbish of Robert Reich” 😉 (joke)
Enjoy the birds. I have some wine to bottle – home grown Muscat of Alexandria, possibly “one of the oldest genetically unmodified vines still in existence”. (Tasting notes: “Gurt Lush”)
And don’t forget to do your patriotic duty to go out and panic buy, as ordered by HMG.
One Americano so far
About 20 years ago when there was a possibility of a petrol shortage, I was in Cornwall and a small rural garage had this sign “PANIC BUYING WELCOMED”.
It’s an ill wind….etc.
🙂
You have reified just how much the stock market passes on risk to ordinary people in modern economies who aren’t even involved in creating bubbles in the first place.
Plus, the captured states that essentially underwrite this behaviour and have the gall to call themselves ‘democracies’.
Happy birding.
Thanks
[…] The FT’s indifference to economic madness Richard Murphy […]
Might the detachment of wealthy speculators/gamblers from the societies they exploit, the main stream media avoidance of objective analysis and the choice of politicians to be effectively uncaring about regular citizens and their children, be a deliberate combination?
If so, might such indicate that, with the probable exception of the Nordic countries, countries which self-label as “democracies” are, in reality, plutocracies?
”An irate, tireless minority, keen on setting brushfires of reality, equity and care in peoples’ minds can, and have, over time, held back the powers of the greedy and the gullibility of the inert.” (From Samuel Adams)
Delaying getting back to the garden (where a robin has been watching me ) I kept surfing and found a report put out by Clive Lewis and others “Ending Treasury Induced Decline ” .
At first glance it looks a case of ‘much to agree with”.
With Miliband daring to criticise Israel and release much of the intelligence report on the danger of climate change, maybe we can have a little hope that Labour is moving towards the real world?
for others staying in https://99-percent.org/wp-content/uploads/2026/09/TID-paper-for-print-v2.pdf?fbclid=IwY2xjawUkqVtleHRuA2FlbQIxMABwZG9mAWJyaWQRMFVRelUzeGxXYzFkRVdQN3RzcnRjBmFwcF9pZBAyMjIwMzkxNzg4MjAwODkyAAEehlZRZtbrzD9ASTGKjVtBvO7CmLuE8Ddj8bM0Tp-0kxIE0l2-dCX3kAEmAOI_aem_Jt3h7ufCrV6ZoMm7pEYbIg
TL;DR (AI created):
This paper from the Progressive Economics Working Group argues that one of the biggest barriers to renewing the UK economy is the way in which economic power has been removed from democratic control. Over the last forty years, governments have increasingly handed crucial decisions to HM Treasury, the Bank of England and the Office for Budget Responsibility, while constraining themselves with fiscal rules that repeatedly fail. TID-paper-for-print-v2.pdf
The authors argue that this system is effectively “wired for regress”. Fiscal rules restrict what governments can contemplate, while the Bank of England relies heavily on interest rates to tackle inflation even when inflation originates in external shocks that higher rates cannot resolve. Meanwhile, assumptions about government debt and money creation unnecessarily restrict the options available to elected governments.
The proposed solution is to “rewire” the state. The paper suggests creating a Department for National Strategy, changing the Treasury’s role, establishing an Inflation Control Office with tools extending beyond interest rates, broadening the OBR’s definition of economic responsibility, and strengthening regulation of strategically important industries.
The fundamental argument is about democracy. If elected governments are held responsible for economic, social and environmental outcomes, they must have control over the economic tools needed to deliver them. Economic responsibility should therefore be judged by whether government delivers sustainable prosperity, functioning public services, reduced poverty and environmental security, rather than whether it complies with arbitrary fiscal rules. Institutional reform is, in that sense, essential to economic renewal.
—–
The big problem: it does not understand money.
Consumer confidence is at rock bottom with many UK stores reducing their upcoming stock replenishments. The public know what is coming, why doesn’t a newspaper with “financial” in it’s title?
Richard,
You are perfectly justified in serving up a long sentence. I’m sure we can all think of a few other people who should be doing something similar at the moment.
This offers a potential alternative explanation for the socially bizarre and economically illiterate FT stance. Perhaps our legacy mass media are simply following the orders of Peter Thiel’s nazi inspired New World Order CEO controlled global oligarchy. Thiel has spent decades legally crafting and socially and financially engineering his Überman alternative whilst easily buying the US/UK’s political class.
https://open.substack.com/pub/jimstewartson/p/thiels-antichrist-confession-if-youre?r=i28j5&utm_medium=ios