Income Inequality and Debt: Just A Coincidence?

I just glanced over this report, and was struck by the chart on page 1, which shows the share of U.S. income taken by the top 1.0% of earners from 1914 to 2006. It shows the share of U.S. income going to the wealthy soared in the 1920s, just before the Great Depression, and in recent years, just before the Great Recession. This is nothing I didn't know. But what struck me was the almost exact match to the total credit market debt to GDP chart, found on this website. Total U.S. debt also soared in the 1920s, fell in the Great Depression, remained low for a while, then soared again in the 1980s and 2000s. Party on!

The bottom line is, the top 1.0% can only gain that high a share of the nation's income by having the bottom 99.0% go deeper and deeper into debt. Because it requires a gap between what the bottom 99.0% are paid and what they buy. Those who have their values set by commercials and get hooked into U.S. debt-fueled consumerism made the growth of income inequality possible.

And by running huge debts to head off another Great Depression, the federal government is just keeping the game going a few more years.

And by the way, take a close look at that debt to GDP chart and ask how it is we are going to get out of the mess created by Generation Greed, particularly if it will exempt itself from any “shared sacrifice.” If people do not accept that they will become worse and worse off in many ways for many years, it will be a long time before any President, Governor or Mayor is popular again.