CNN posted a video from Youtube entitled, ‘Wealth Inequality in America’. It is reported to have gone viral with 3.8 million hits. Given CNN’s track record, I would assume that their pundits would argue that this supports the view that we need to raise taxes on the rich. Whereas the tax code is in need of change, the factors behind this phenomena have nothing to do with the tax code.
This site has repeatedly argued that the economic policies of America — trade, fiscal, and monetary policies — have created this skewed distribution of wealth. The US federal government (both the Presidency and Congress, both Democrats and Republicans) have done nothing to stop large corporations from sending higher paying manufacturing jobs to China and other cheap labor countries. To compound this, the federal government has not only allowed illegal labor from flooding America by not enforcing federal laws, but it has also worked to prevent states from enforcing federal laws. This huge pool of illegal labor further pressures the wages on the lower scale of the labor force, taking jobs from the poor and the young.
To counteract these negative forces on the US economy (e.g. a highly paid factory worker is unable to find work, or is forced to work at McDonalds, this affects the economy in a negative fashion), the federal government increases the amount it borrows and spends that money to help stimulate the economy. Obama’s administration has borrowed and spent so much money that he increased the national debt over 50% in just 4 years. The government issues debt to borrow the money — and this money must be repaid. The governments of Greece, Ireland, Portugal, and Spain have done the same thing — and their economy and people are now suffering tremendously due to the size of their debts.
Bernanke has moved to stimulate the economy by seeking to increase the amount of debt in America — both private and public. He has printed an unprecedented amount of dollars in an attempt to reflate the financial bubble that broke in 2008-2009. The Federal Reserve policy of Bernanke (and Greenspan before him) is the prime force that has created the skewed wealth distribution in America, where 1% of the population control 40% of the wealth (you have got to see this video for a graphic illustration). The liquidity of funds created by the Federal Reserve drives the stock market higher, and this is fuels the wealth of the top 1%.
Both Democrats and Republican political leaders receive tremendous amount of ‘contributions’ from the top 1%, and in return pass laws and make policies that favor them. This is one factor for the lack of action from Washington on the export of manufacturing jobs to China, as it reduces the costs (and thus increases the profits) of large US companies. The US government then turns around and borrows money (which the laid off laborer must repay — or his children must repay) to spend to offset the loss of these good jobs. To help the US government borrow more, Bernanke buys government debt to keep the interest costs artificially low (which destroys the market mechanism to prevent the government from over borrowing) and continues to print money to make stock market bubbles — which mostly benefit the top 1% (they very people who started this chain of events).
The reason why this issue is taken up on this site is because this horribly skewed wealth distribution is eroding the foundations of democracy. The top 1% has so much wealth that they basically can control the Presidency and the Senate. They also can control the media, which is crucial for them as they need the media to influence the thinking of the other 99% (the media goes on forever about gay marriage, but they never serious discuss the factors that are causing the skew in wealth).
This site has argued that the Anti-Christ will be a political figure that will rise to power in Western democratic nations. When he rises to his final position of power, he will subvert the democratic institutions and processes and will act as a tyrant. The current economic policies being followed in America is eroding its democratic processes, and will lead to America falling under the dominion of the Beast — unless something drastic is done to break the current cycle.
(refer to http://economy.money.cnn.com/2013/03/08/wealth-video/?google_editors_picks=true or look up video on Youtube).