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fifth, so that the top quintile collectively accounted for 89 percent of the
total growth in wealth, while the bottom 80 percent accounted for 11
percent.
Debt was the most evenly distributed component of household
wealth, with the bottom 90 percent of households responsible for 73
percent of total indebtedness.
Wealth concentration in too few hands while the general populace is
saddled with too much debt to buy the goods and services produced by the
corporations, is a replay of the conditions leading to the crash of 1929 and
the ensuing Great Depression.” (“Consumers Have Powerful Weapons
Against Wall Street’s Bad Practices”, Pam Martens, Wall Street on Parade)
While the upward distribution of wealth speaks to the implicit
unfairness of the system, its impact on demand can be offset by increases
to government spending vis a vis fiscal stimulus. Unfortunately,
policymakers have abandoned fiscal policy altogether and transferred de
facto control of the economy to the Central Bank. The Fed is not just
calling all the shots, it’s doing so in a way that reflects its bias towards big
finance. This is why the recovery has been so abysmal, because the policy
has focused on boosting profits for Wall Street instead of revitalizing the
broader economy. Even so, Fed chairman Ben Bernanke has
acknowledged that the real reason unemployment is still so high, is not
“structural”, (as conservatives argue) but lack of demand. Here’s what he
said in a recent appearance before Congress:
“Is the current high level of long-term unemployment primarily the
result of cyclical factors, such as insufficient aggregate demand, or of
structural changes, such as a worsening mismatch between workers’ skills
and employers’ requirements? … I will argue today that, while both
cyclical and structural forces have doubtless contributed to the increase in
long-term unemployment, the continued weakness in aggregate demand is
likely the predominant factor.”
Bernanke’s admission is further underscored by a McKinsey survey
of corporate managers from around the world which found that “the single
greatest fear among executives everywhere is weak consumer demand for
their companies’ products and services.” (CBS News)