Preparation
Worth reading "the balancing mechanism" first to make sense of this article.
This article gives the symptoms, causes and consequences; and explains why hyper-financialisation is important in the lives of people, rich and poor. It doesn't suggest any remedies, other than recommending we all take to the streets in protest - what better time for a Revolution?. That will be for a future article.
Meanwhile, we will finish on a lively discussion and recap of this article.
Hyperfinancialisation of the American Economy
This post summarises the above Youtube video.
1. The symptoms
This post explores the hyperfinancialisation of the American economy, a condition in which Wall Street's gains have vastly outstripped Main Street's wages. Here are the symptoms - what "hyper-financialisation" means in practical terms.
1. Several metrics are used to illustrate this divergence between Wall St and Main St:
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The hours of labour required to buy one share of the S&P 500 has increased from 25 hours in the 1960s–1990s to a peak of 200 hours after 2008.
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A comparison of the S&P 500 to personal income shows capital (the stock market) pulling away from labour (wages), a reversal of the mid-20th century trend.
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The Buffett Indicator (S&P 500 vs GDP) reflects the same imbalance: GDP has grown 970% since 1980, while the stock market has risen over 5,000%.
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Meanwhile, wages relative to GDP show that the average worker’s income has stagnated or declined in real terms.
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The S&P 500 has grown by 6,876% versus 800% for hourly wages over the same timeframe.
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The Price-to-Earnings ratio has surged, indicating people are paying more for the same future returns.
2. The causes
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Post-2008 monetary policy: QE, ZIRP, and fiscal deficits inflated asset prices. QE alone involved trillions of dollars created to buy treasuries, corporate debt, and mortgage-backed securities.
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Trade policy and globalisation: Agreements like NAFTA hollowed out domestic manufacturing and led to persistent trade deficits.
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International finance mechanics: The trade deficit must be matched by capital inflows — currently ~$130 billion/month — into U.S. assets, pushing up valuations and creating artificial demand.
3. The Consequences
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A stark wealth divide: The top 1% own 50% of equities; the top 10% own 93%.
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Labour’s shrinking share of income and declining wage power.
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Asset unaffordability: Housing has become increasingly out of reach, especially single-family homes.
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Government dependency on market performance: Capital gains tax (now 9% of revenue) ties fiscal health to asset bubbles.
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The rise of populism, which stems from this capital–labour divide and contributes to political and social polarisation.
4. Why this is important
These economic imbalances are the “core issues” in U.S. society, driving everything from rising suicide rates and antidepressant use to deepening political dysfunction.
What to do? The bottom 95% of Americans to unite around economic reform — to reject partisan distractions and tackle the deeper forces of hyperfinancialisation, overvalued currency, and hyperglobalism.
The real divide is not left versus right, but the top 1% versus the bottom 95%.
5. Listen to a lively discussion
Aimed at raising awareness of the crisis and human suffering facing ordinary people due to hyper financialisation:
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