It's Wall Street's Turn To Be Stripmined

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Wall Street’s dominance seems eternal until the pendulum of extraction, speculation and wealth-power inequality has reached an extreme, at which point the pendulum reverses.

Declaring that it’s Wall Street’s turn to be stripmined wouldn’t be such a big deal if asset bubbles weren’t propping up the entire US economy. An economy enjoying organic expansion of productivity across the board is one of improving wages, opportunities and quality of life. A bubble-dependent economy provides none of these advances in general prosperity: it doesn’t increase productivity, wages or our quality of life, it only increases wealth-power inequality, creating a society of Haves and Have-Nots destined to swing from discontent to disruption.

What a bubble-dependent economy does do is increase inflation and crush affordability for all those who don’t earn enough and own enough to benefit from the bubble’s inflation of asset valuations. By boosting the wealth of the top 10%, asset bubbles create wealth effect spending by the top 10% who own roughly 90% of income producing financial assets. Spending by the top 10% is now roughly 50% of consumption.

Some of this “trickles down” to the bottom 90%, but “trickle down” from higher spending isn’t real growth that increases productivity and the purchasing power of earned income. It’s an ephemeral, illusory simulacra of authentic growth that is doomed to contract once the bubble pops–and all bubbles pop because they’re speculative fantasies inflated by Federal Reserve goosing of “easy money,” Wall Street “management” of the market, tax and regulatory statutes dictated by lobbyists and the desperation of punters who see scoring big gains via speculation as their only hope of escaping debt-serfdom.

Let’s start with the stripmining of the workforce over the past 50 years. A trillion here, a trillion there, and pretty soon we’re talking a multi-generational shift of the economy’s income from those doing the work to those owning the assets, a cumulative shift of $150 trillion as the workforce’s share has stair-stepped down since 1970.

Everything is forever until it is no more: Wall Street’s dominance seems eternal until the pendulum of extraction, speculation and wealth-power inequality has reached an extreme, at which point the pendulum reverses and goes to an extreme at the other end of the spectrum. In the past 100 years, the pendulum reverses direction about every 50 years.

But this is not written in stone; extremes beget nonlinear dynamics that can outrace previous cycles and norms.

Once the organic expansion of the 1990s ended, the Federal Reserve went all-in on stimulus that boosted assets, a policy that was jacked to 11 in the aftermath of the speculation-fraud fueled Global Financial Meltdown of 2008-09. These policies effectively rigged the economy to benefit the top 10% ownership class at the expense of everyone else. Here we see the wealth of the top 1% soar from the Fed’s “save the rich, save the banks, save Wall Street” policies:

The rigged “wealth effect” concentrated wealth in the top 1%:

And the 90% to 99%:

The unearned income from financial assets follows a power-law distribution–most goes to the top 0.1%

One might imagine there would be some “trickle down” to the bottom 50% households; one would be wrong. The bottom 50%’s share of financial wealth hit a new low in one of the greatest speculative bubbles in history. Good job, Fed, Wall Street and policymakers: you’ve guaranteed a pendulum swing to an extreme few even think is possible, even as it is now inevitable.

But alas, all bubbles pop, and 1929 offers an interesting analog of “it’s not a bubble”:

Everything was going so well, until those who’ve been stripmined for 50 years reckon that It’s Wall Street’s Turn To Be Stripmined and so it’s time to end Socialism for the Rich that’s been passed off as (heh) “capitalism” (cue the laugh track).

As always, please note I don’t “like” what I see on the horizon, I’m simply calling it as I see it. Play it as it lays.

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Source: http://charleshughsmith.blogspot.com/2026/11/its-wall-streets-turn-to-be-stripmined.html