The Truth About U.S. Inequality
Rising economic inequality and how to address it has been one of the most important issues in the United States since the Great Recession ended in 2009. Rising inequality has spurred a powerful left-wing economic movement that kicked off with Occupy Wall Street in 2011, led to the 2016 presidential campaign of socialist Bernie Sanders (which was very popular with young Americans), and has now contributed to the rise and growing clout of far-left politicians including Elizabeth Warren and millennial socialist Alexandria Ocasio-Cortez, who are both calling for wealth redistribution policies.
At the core of this left-wing economic movement is a growing disbelief and distrust in capitalism itself, as well as the belief that an excessive rich-poor gap is an inevitable outcome of capitalism. As a result, young Americans now favor socialism over capitalism. Even 45% of Republican voters support Alexandria Ocasio-Cortez’s 70% top-tax-rate proposal, while “conservative” Fox News host Tucker Carlson threw in the towel on capitalism.
The report you are reading — “The Truth About U.S. Inequality” — completely turns the conventional wisdom (i.e., the left-biased explanation) about growing U.S. wealth and income inequality on its head. Here’s the reality in a nutshell: growing U.S. economic inequality is not the fault of capitalism, but the byproduct of unbacked fiat (aka “paper”) currency, central banking/the Federal Reserve, and a massive wealth bubble that has been inflated by the Fed. Instituting free market capitalism and sound money is actually the only solution to America’s growing economic inequality.
Here Are The Key Truths About U.S. Economic Inequality:
- Rising U.S. economic inequality is not the fault of capitalism, but the fault of the Federal Reserve and unbacked fiat (aka “paper”) currency.
- Fiat currency and central bank market interference go against the very principles of capitalism.
- The left is using growing U.S. wealth and income inequality alarmism as a ploy to attack the straw man of “capitalism” for the purpose of instituting socialism.
- U.S. wealth and income inequality is the result of a long-term Fed-driven bubble in household wealth (which is due, in turn, to bubbles in stocks and bonds).
- The long-term U.S. stock and bond bubble started inflating in 1981/1982, which is exactly when the rich-poor gap started to increase (that is no coincidence!).
- The rich own a disproportionate share of the stock and bond market, making them the prime beneficiaries of the stock and bond bubble.
- U.S. wealth and income inequality are largely driven by the same factors: the rich make their living as owners of capital (stocks and bonds), the middle class make their living through salaried work, while the poor earn income through a combination of work and government transfer payments.
- The U.S. wealth bubble is not a permanent situation: it is actually going to burst, which will cause the rich-poor gap to shrink.
- Americans should spend more time worrying about the wealth bubble and the economic crisis that will occur when it bursts, rather than the temporary wealth inequality that it has created.
- Socialism is the wrong medicine because it doesn’t strike at the root of the problem; free markets, ending central banking, and instituting sound money are the right medicine.
- The left/socialists do not address (or even mention!) the role of the Fed, fiat currency, and asset bubbles in driving U.S. inequality because they are completely disingenuous. They are not interested in genuine solutions — they are only interested in instituting socialism.
Source: Jesse Colombo | Explaining Capitalism