I am sure you have heard about the middle class being squeezed and the poor becoming poorer. Well guess even the rich are becoming poorer relative to the super rich. The top 10 percentile control 50% of U.S. wealth. However what is more alarming is the top 0.10% and that is no typo control 10% of the nations wealth. These are the people who makes $2 million a year or more.
Let's put this in perspective, in the 1950's the bottom 90% of Americans control 68% of the nation's wealth. Michael Farr, Managing Director Farr, Miller & Washington CNBC Contributor points out a study by Piketty and Emmanual Saez. This study found that the top 1% of earners captured 52% of total income growth from 1993-2008. These same researchers found that the share of total income accruing to the top 1% of earners reached 23.5% in 2007, just prior to the financial crisis.
Source http://www.cnbc.com/id/41757380/
What could have caused such a concentration of the nation's wealth? I am no expert but I have to say public policy has to be the largest contributing force. Deregulation of the financial services industries how about that for starters? Once deregulation took hold, it became more profitable to invest in debt products than to invest in factories, farms, and any industrial manufacturing activities. Guess who benefited from this?
Following The Great Depression the financial industry was regulated heavily. Banks weren't allowed to own investment banks and vice versa. These regulation helped create a large and prosperous middle class. This newly emerging middle class had real wealth and helped to create the United States to become the ultimate power on the planet. This separation between banks and investment helped keep this nations economy in relative stability for decades until the 1970's.
Then came The Vietnam War and Richard Nixon formally abandoned the gold standard. President Nixon need to print more money to reduce national debt. To my gold bug friends, I am not advocating going back to the gold standard. Although gold has the advantage of maintaining purchasing power by its very nature is to restrictive in times of bank panics, recessions and depressions. If the FED just maintains a steady supply of money without printing in excess to bail our shitty politicians, the middle class will have real wealth.
These are just a few examples of how public policy is leading us into Plutonomy (http://www.investopedia.com/terms/p/plutonomy.asp). Plutonomy This term was coined by a famous research report written by 3 Citigroup Analyst (search for Citigroup Plutononmy and read it). It's safe to say trickle down economics doesn't work. Actually the reserve happened, we experienced trickle up economics over the past decades. It will only get worse as the FED prints more money and our politicians favor special interests groups. The American people like usually gets shafted.
Source: http://finance.yahoo.com/news/How-the-rich-became-the-%c3%bcber-cnnm-1647084218.html?x=0
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