Income Inequality and Financial Crises

As more people suffer the loss of their jobs, their homes, and their self-respect during the Great Depression it is important that we study the reasons of how the greatest country in the world got into this dilemma.

If you get a chance read the following article to try to get some insight into how we got where we are.

The world economy is changing rapidly and it is more important than ever to find as many ways as possible to leverage technology and the world market to make money.

Income Inequality and Financial Crises

By LOUISE STORYPublished: August 21, 2010

David A. Moss, an economic and policy historian at the Harvard Business School, has spent years studying income inequality. While he has long believed that the growing disparity between the rich and poor was harmful to the people on the bottom, he says he hadn’t seen the risks to the world of finance, where many of the richest earn their great fortunes.

Now, as he studies the financial crisis of 2008, Mr. Moss says that even Wall Street may have something serious to fear from inequality — namely, another crisis.

The possible connection between economic inequality and financial crises came to Mr. Moss about a year ago, when he was at his research center in Cambridge, Mass. A colleague suggested that he overlay two different graphs — one plotting financial regulation and bank failures, and the other charting trends in income inequality.

Mr. Moss says he was surprised by what he saw. The timelines danced in sync with each other. Income disparities between rich and poor widened as government regulations eased and bank failures rose.

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