In today’s world, economic inequality is glaringly evident. As wealth surges, particularly among the affluent, the stark contrast between the haves and the have-nots is increasingly troubling. The wealthiest 10 percent of earners are enjoying a substantial share of the national income, fueled by soaring stock prices, escalating real estate values, and unprecedented corporate profits.
In stark contrast, the middle class finds itself increasingly beleaguered. High-quality white-collar positions have been reduced in number, while manufacturing jobs continue to be offshored. Formerly stable professionals are now scrambling for low-wage service jobs, prompting a significant decline in labor force participation, which recently reached its lowest point in 36 years. The downward trend in participation rates has persisted since the new millennium.
It’s disheartening to witness individuals working for merely a fraction of their previous salaries—especially in light of the Fed’s zero-interest policies, which have eroded the fruits of diligence, frugality, and self-reliance. Many individuals are choosing to disengage from the workforce rather than settle for tedious jobs that offer minimal compensation.
So, what kind of economy are we dealing with? Clearly, something is amiss. This article seeks to shed light on the situation.
Worse Off
Recently, Pulitzer Prize-winning journalist David Cay Johnston published an eye-opening article asserting that Americans fared better after the Great Depression than they do today. Unfortunately, his findings went largely unreported by mainstream media, appearing instead on Al Jazeera America. Here are some of Johnston’s critical findings:
“News coverage often focuses on immediate outcomes—such as yesterday or last year—without taking a broader perspective. However, when we look back over time, it becomes evident that most Americans are worse off today. Indeed, those emerging from the Great Depression experienced greater improvements than those who have faced the Great Recession, which officially concluded on June 30 six years ago.
“It may be surprising, but the data reveals that the vast majority of Americans—90 percent—achieved higher income growth in the 1930s than in recent years.
“In 2012, income for the bottom 90 percent declined compared to 2009, marking a drop of $556 or nearly 2 percent, even after adjusting for inflation, resulting in an average annual income of $30,997.
“Conversely, by 1936, three years after the Great Depression’s end, most households enjoyed a 31-percent income increase compared to 1933. In today’s dollars, this represented an average gain of $2,146.
“Thus, while absolute incomes may be higher now, in relative terms, most are worse off instead of experiencing rapidly increasing earnings as was the case eight decades ago.”
The Trifecta of Depravity
Notable economist Thomas Piketty has gained widespread attention for his examination of wealth inequality. While he has received much praise, his remedies for this disparity fall short. His perspective, focused mainly on the division between the wealthy and everyone else, suggests a failure within capitalism itself. This viewpoint fundamentally misses the mark. His calls for increased government intervention—specifically, higher taxes—do not address the root of the issue.
At Economic Prism, we argue that the real problem lies not in capitalism’s inherent flaws nor the gap between different income groups, but rather in a system that has been manipulated to favor the wealthy. This situation is perpetuated by central banking practices, coerced currency, and bailouts for major financial institutions. This “trifecta of depravity” twist capitalism into a version of cronyism that disproportionately benefits the affluent. Piketty often overlooks the fact that the ultra-rich operate within a system that largely favors them, a sentiment echoed by Paul Krugman.
Understanding how this system operates is essential. The Federal Reserve’s practice of mass money creation via unbacked currency inflates financial assets—predominantly owned by the rich. Large banks receive almost limitless access to low-interest loans, allowing them to amplify risky financial ventures without personal risk. When these investments inevitably fail, taxpayers—your money—are called upon to cover these losses.
Throughout this process, the Fed claims its policies will generate jobs. Unfortunately, the reality is that these monetary strategies hinder the middle class, rendering it increasingly difficult to advance through hard work and savings. Attempts to bridge the income gap through excessive taxation merely entrench the system of government corruption that fosters such inequities to begin with.
A better approach might involve dismantling the Fed, reinstating honest currency backed by gold and silver, and eliminating bailouts in government dealings. While such measures may not guarantee equal outcomes, they would indeed empower individuals, enabling them to shape their destinies without facing undue obstacles from the government each day.
Sincerely,
MN Gordon
for Economic Prism
