What led to the current Greek fiscal calamity? To hear our betters in the economic world, it is all a result of the Greeks being shiftless, irresponsible borrowers who spent themselves into penury, and must now pay the price. But if that is so, why is it that the bankers that lent them the money, year after year, encouraging them ever more strongly to keep taking more, and who are presumably able to tell a good loan from a bad one, didn't cut them off, and make them live within their means, for their own good?
Well, you see, that's the way things used to work, at least from the thirties until the nineties. The wise old mortgage lender wouldn't grant you a loan you couldn't handle. That might have been frustrating at the time, but in the long run, it saved you from disaster.
But then, something happened. Rich people, and their stooges, like Reagan, Bush, Gingrich- you know the names- decided that they just didn't have enough money, so they tilted the playing field in their direction, and the bucks came rolling on down, beyond the wildest dreams of old fasioned rich guys. That was great for them; I mean, who wouldn't like a 230 foot yacht? But there was one problem: what do you do with all that money? You can't keep a few billion in your mattress, so you have to invest it somewhere. It seems like there could be nothing greater for banks and brokerage houses than to have a bunch of rich guys bring them all their money, but this just creates another problem. Banks have to pay interest on that money, and if they can't lend it out to other people, they are going to end up broke; particularly because those rich guys are hardly going to be satisfied with the measly percent or two that the rest of us have to deal with. But with economic troubles constantly on the horizon, there just isn't anywhere for the banks to safely invest their rich clients' money.
So, the banks just abandoned their principles and used less and less discretion in granting their loans. This was true in this country with banks giving mortgages to people who could obviously never pay for them, and it was just as true with the big international banking institutions, virtually forcing their money down the throats of hapless saps like the Greeks. What's more, anyone who has read this far can see that this entire process is inevitably going to end up in a giant smash. Of course, when that happens, the banks expect the victims of their irresponsible greed to pay the price, and that seems to be the way it always goes.
But you see, there is a simple and obvious answer to this endlessly repeating situation: If you don't cram too much into the pipeline to begin with, it won't explode on you. Allowing rich people to have too much money is the cause of financial crises, and for the sake of all of us, this must be brought to an end, probably by some vast increase in upper tax brackets, combined with enough regulation to prevent them from looting whatever business they get their hands on.
For your information, this is exactly what happened in the nineteen twenties. At that time, there was a vast increase in the share of the nation's wealth that was going to the rich. All sorts of inscrutable investment vehicles were created to give them a place to put their money; and contrary to the popular misconception that no one predicted the final result of this, many economists warned of the inevitable collapse that was to come. Of course, we were under Republican rule, so there was no more chance that any of those guys would get their hands on the levers of power, than that President Romney would appoint Paul Krugman to head the Fed. No, instead, President Calvin Coolidge made Andrew Mellon, the head of a gigantic banking house and one of the richest men in America, to be the Secretary of the Treasury, where he remained until 1932, doing everything he could to increase the portion of the nation's wealth owned by the rich, and thus doing everything he could to see to it that the Great Depression would be as catastrophic as it was.
I am making no argument for fairness here, although that would be a legitimate argument to make. I am stating that letting the rich have more money than they can meaningfully invest is a guaranteed recipe for economic disaster. It is a matter of self defense for us to take back the ill-gotten gains of these rich sociopaths. If we don't the world is doomed to endless replays of the economic collapse we have seen in 1929 and 2008.