The 6 Economic Facts of Life in America That Allow the Rich to Run off with Our Wealth
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However, when Wall Street is left to its own devices, it tends to create vast casinos that dramatically increase financial profits at the expense of the real economy. Worse still, as the speculative casinos grow and grow, the economy as a whole is endangered. Wall Street's grew rapidly just before the great crash of 1929 and just before the Great Recession of 2008-'09. It was stock manipulation during the 1920s and it was the housing casino over the last two decades. But in both cases it happened because Wall Street was deregulated and got too damn big. As the chart below shows, Wall Street is gobbling up more and more of our country's profits.
We learned after 1929 that economic stability required severe financial regulation. We sat on Wall Street for nearly 50 years and it worked beautifully, especially between WWII and the 1970s. There were virtually no financial crashes anywhere in the world. But once we deregulated finance again, all hell broke loose as the world suffered through more than 150 smaller financial crashes. Finance grew and grew until it took down the entire U.S. economy. Along the way, Wall Street offered the easiest path to great riches for the few.
The simplest solution is the one hated by the super-rich: a small sales tax on each and every financial transaction involving stocks, bonds and every kind of derivative. By taxing the casino, we shrink its size and make it less dangerous to the rest of the economy. We also create new revenues for our economy, nearly all of it coming from the top fraction of the top 1 percent. No wonder they don't want us to know that.
Is Knowledge Power?
It's not enough for the greedy rich to buy politicians. They also need to buy our minds. That's why they pay for all this misleading economic education. But if we master the basic economic facts of life, we won't get conned. And we will have a much better chance at building a more just and healthy economy.