Even after 9 years of this, it still boggles my mind trying to understand what sort of mass learning disability prevents so many people from understanding the simple equation or it's relevance.
The richest 1% currently hold over 40% of ALL privately held US wealth. This is true EVEN AFTER you account for what they 'give back'. Some of this wealth was 'created' along with more currency to cover the related transactions but the lion's share of wealth held by the richest 1% has been TRANSFERRED FROM US TO THEM over the last 38 years.
In 1976, the richest 1% held less than 20% of all privately held US wealth. This was less than 1/2 of their previous high of 44% in 1929, the first year of the Great Depression, which by the way was CAUSED by that obscene concentration of wealth and CURED with a partial redistribution of wealth which took place gradually over time.
In 1976, the bottom 99% of American households were sharing over 80% of all privately held US wealth. This was enough to sustain a strong and large middle class while keeping the majority of lower class households out of poverty. They weren't doing well but they were doing ok. The system was working. Most US households were able to make ends meet on the income of a single full time provider. Americans, in general, were thriving. They had home equity and money in the bank.
Right around 1976, probably the 3rd or 4th quarter, the privately held wealth of America began to concentrate all over again. At first, it was a slow concentration resulting primarily from automation, outsourcing, higher corporate profits, and a change of law regarding the trade of oil. Then, Reagan came along and granted huge tax breaks for the rich. While this was great for 'growth' in general, it was bad for the lower majority because it concentrated too much actual wealth and buying power. This along with the growing irresponsibility of the American consumer junkie concentrated more and more bottom line wealth while increasing consumer debt drastically. In fact, it literally multiplied.
As the share of wealth held by the richest 1% increased significantly from under 20% in 1976, the share of wealth held by the lower 99% dropped from over 80% in 1976 to significantly less. Our nation's privately held wealth was being transferred from poor to rich. AGAIN.
Within a few years, the equation was no longer working for the average American household. It became more and more necessary for American households to secure second incomes in order to make ends meet. Still the concentration of wealth was allowed to continue. The middle class was shrinking and the lower class was expanding. This effectively INCREASED the NEED for welfare and charity within the US.
By the early 90s, consumer debt had skyrocketed, home equity was down significantly and something had to be done in order to sustain the US housing market. But the bankers didn't want 'sustenance'. That was too boring. They wanted GROWTH and LOTS of it to CASH IN ON. Sub-prime is what the finance industry came up with. The laws requiring down-payments were changed as a FAVOR for the finance industry, the first sub-prime loans were made in 94, the housing market was artificially inflated, home sales were way up within a year or two, and corporate profits soared. This made the already rich even richer.
In 2005, Allen Greenspan issued the following warning to Congress: "The income gap between the rich and the rest of the US population has become so wide and is growing so fast that it may eventually threaten the stability of Democratic Capitalism itself."
By 2007, just as Allen Greenspan warned, BECAUSE of the growing concentration of income, the US economy had in fact, become unstable. The middle class had simply become too weak to sustain their share of the US economy. Meanwhile, the final batch of less valuable sub-prime paper had been sold to unsuspecting investors. The housing market collapsed because of and IN SPITE of sub-prime, market value was lost, the final batch of investments became worthless, Fanny Mae and Freddy Mac failed along with a number of smaller banks, jobs were in the process of being lost by the millions, the 780 BILLION DOLLAR bailout of 2008 became necessary, and Barack Obama was elected in order to right the ship. He did so in part, with more welfare and government stimulus. This is the 'printed money' that so many people have the GALL to complain about.
Unfortunately, the privately held wealth of America has been allowed to keep concentrating. In part, because Obama has also done a number of favors for the rich and their respective industries. The concentration is not identical to that of 1929 but it's close enough.
The richest 1% currently hold over 40% of all privately held US wealth. As a DIRECT RESULT, there simply is not enough wealth circulating beneath them to make ends meet for the lower 99%. Sure, the top 20% is doing fine but most of that wealth is held by the richest 1%.
The lower majority of American households continue to struggle as they share a near record low of privately held US wealth. Many, in spite of multiple incomes. The lower class has expanded significantly increasing the need for welfare and charity even further. Meanwhile, the rich continue to get richer and richer EVEN AFTER you account for what they 'give back'.
Now, we are well on our way to another Great Depression. It will come by 2020. Sooner and more severe if we end up with more conservative (wealth concentrating) economic policies.
ALL OF THE ABOVE IS A DIRECT CORRELATION. GREED KILLS.
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