When government policy protects wealthy individuals and their investments from the consequences of bad decisions, it eliminates the market's self-correcting mechanism. This prevents downward mobility, stagnates the class structure, and creates a sick, caste-like economy that never truly corrects.
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Deficit spending acts as a hidden tax via inflation. This tax disproportionately harms those without assets while benefiting the small percentage of the population owning assets like stocks and real estate. Therefore, supporting deficit spending is an active choice to make the rich richer and the poor poorer.
To fund deficits, the government prints money, causing inflation that devalues cash and wages. This acts as a hidden tax on the poor and middle class. Meanwhile, the wealthy, who own assets like stocks and real estate that appreciate with inflation, are protected and see their wealth grow, widening the economic divide.
Extreme wealth inequality creates a fundamental risk beyond social unrest. When the most powerful citizens extricate themselves from public systems—schools, security, healthcare, transport—they lose empathy and any incentive to invest in the nation's core infrastructure. This decay of shared experience and investment leads to societal fragility.
As homeownership becomes unattainable without generational wealth, social mobility is stalling. The growing gap between asset owners and renters is calcifying, transforming the American economic structure from a meritocracy into a caste-like system where your financial starting point determines your destiny.
Historically, what tears societies apart is not economic depression itself but runaway wealth inequality. A major bubble bursting would dramatically widen the gap between asset holders and everyone else, fueling the populist anger and political violence that directly leads to civil unrest.
The system often blamed as capitalism is distorted. True capitalism requires the risk of failure as a clearing mechanism. Today's system is closer to cronyism, where government interventions like bailouts and regulatory capture protect established players from failure.
The economic system champions individual responsibility for the middle class but provides government bailouts and shields large corporations and the wealthy from failure. This cronyism prevents creative destruction, calcifies the class structure, and stifles opportunities for new entrants.
Broad, non-means-tested stimulus programs, like the COVID CARES Act, function as the greatest intergenerational theft in history. They overwhelmingly benefit asset-owning incumbents by inflating housing and stock prices, while burdening younger generations with the debt used to finance the bailouts, effectively locking them out of asset ownership.
Through capital and connections, the top 1% can navigate the legal and political systems to their advantage—from securing bailouts to obtaining pardons. This creates a two-tiered system of justice where the law binds the 99% but does not equally protect them.
When a society attempts to eliminate all risk and shame aggressive competition, it stifles the very forces that drive innovation and growth. This cultural shift from valuing freedom to prioritizing safety makes people docile and anxious, leading to economic stagnation and a loss of competitive edge.