A new report by the Federal Reserve Bank of St. Louis reveals that the wealth recovery since the bottom of the recession has been 45%. It also reveals that most of this recovery has been in the stock market.
It does not mention the fact that about 20% of stock market investors own 80% of the shares.
Then what about the rest of Americans, who lost about 40% of their wealth due to falling home prices? They have not participated in the wealth recovery.
The report does show that the biggest losers by far were Afro-American and Hispanic families with poor educations. They bought homes. They have been hammered by the fall in housing prices.
The report fails to mention that the government forced lenders to lend in so-called red-lined neighborhoods: low-income, low-education, racially profiled areas. So, the lenders followed orders. The low-income people lined up to get subprime loans.
Had these people rented, they would not have lost their wealth. But they were sucked in by promises of attaining the American dream: home ownership. They were offered subsidies from the government to become eligible. Result: “Surprise! You lose! Now you can start over, with ruined credit!” This has been the inevitable and predicted outcome — predicted by Austrian School economists — of that ever-popular promise, “I’m from the government, and I’m here to help you.”