Wall Street should be called Welfare Street.
Wall Street should be called Welfare Street. Skreidzeleu / Shutterstock.com

There has been a lot of talk about the turmoil in the markets. Some analysts say it's caused by violent swings on the Chinese financial markets and also the long-predicated slowdown of its real economy (you can't grow at 9 percent forever—that kind of growth is an anomaly and not what's normal for capitalism—about 1 percent). Some are blaming the cheap oil for this disturbance, despite the fact it has contributed to job growth in the US.

Cheap oil provided Obama with the second economic stimulus package he needed but could never have obtained from Congress. So, turmoil in US's financial markets has not yet meant turmoil in the job market, which is still robust and unemployment is at below five percent. This is why economic indicators are not a "flashing concern."

So what is going? My bet is the quantitative easing (QE), a government program that essentially stimulated the wealth of the rich instead of the poor by buying government bonds. The program came to an end last year. QE helped banks and corporations inflate the value of financial assets to levels that could not, in reality, be supported by the market. Since QE ended, these stocks and bonds have been left to justify their prices. But how long will this unrealistic situation last? Expect Wall Street to return to Washington for more government cheese.

The big question in the US today? Not this: Do you want socialism or not? But this: What kind of socialism do you want? QE represents the type of socialism we have at this moment.