The financial system in the United States is rigged in favor of the wealthy. I’m sure you’re not terribly surprised about that.
A big part of the Occupy movement’s anger is focused on the way in which giant financial institutions avoided the moral hazard of their positions. The created a huge asset bubble, raked in billions of dollars and, when the bubble popped, got a gigantic parachute to ensure their soft landing. They were protected (with taxpayer dollars) from failing because we were told that if these banks failed, Main Street would fail. Well? Main street may not have failed, but it’s pretty damn close.
It didn’t have to be that way. Instead of bailing out banks directly, we could have given money to homeowners to help them pay their mortgages. … Both households and banks would have realized gains, and this would have been much more politically acceptable.
[P]oliticians determine fiscal policy while monetary policy is in the hand of technocrats at the Fed. And those technocrats – mostly economists – have been trained to ignore distributional issues. Distributional questions involve value judgments, and economists shouldn’t be making such judgments in their role as professional economists. That’s what politicians are for.
But because we have a Tea Party hobbled political system, we cannot take the fiscal route that would benefit more people and the economy overall. We’re stuck with the Fed, a quasi-independent entity that can act without political approval. But the ability of monetary policy to effect change while we stuck in a liquidity trap is extremely limited.
Basically, with the modern GOP calling the shots (despite a Democratic President and a Democratic Senate), the nation will continue to endure the austerity beatings that Paul Ryan, John Boener and Eric Cantor have determined are best for us.