The Great Recession of 2008 and 2009 started with a bottoming out of the stock market, which eventually led to the loss of millions of jobs, and trillions of dollars of wealth throughout the country. This devastating crash was the risky gambling brought by a severely under-regulated financial system, and the entire country suffered as a consequence.
Although it lost about 50 percent of its value during the recession, the S&P 500 rose 166 percent during Obama’s presidency. Since Donald Trump’s election on November 8, the Dow Jones has had a record rise of almost 3,000 points, topping the 21,000 mark for the first time in history. The U.S. stock market gained $1.4 trillion alone between the election and inauguration day.
These figures represent a trend in the U.S. economy for decades: incomes for the average American remains stagnant, while the financial industry continues to , even as it crashes the entire economy every now and then.
In a perfectly functioning economy, this growth of the financial sector should be correlated with growth in a wide array of industries, and thus a rise in wages for the average worker. In fact, every robust economy requires a prosperous financial industry. This is because the intended purpose of the industry is to collect savings and funnel them toward productive investments.
However, today’s financial sector has a much different objective: quick gains from gambling and inflating asset prices within the financial industry itself, in areas such as real estate and equities. Today, only 15 percent of the money flowing from banks is used for business investment. This money makes its way into the real economy where most of the country operates, while the other 85 percent circulates through a closed financial loop that only benefits a small percentage of the country.
(Excerpt) Read more at dailycollegian.com ...
