Economic inequality is the reason for the latest depression/recessioneconomic debacle.   And that inequality was created by the Reaganadministration and reinforced and increased by subsequent Bushadministrations and triangulating Democratic administrations.

The greed of the wealthy few haves and have mores, aided andabetted by the GOP and DINO GOP wannabes have served to keep wagesstagnant or decreased for regular Americans who have become the haveless and have nots.

As Dean Baker writes at The Nation: "The roots of this economic crisis are very much centered in the growth in inequality over the past three decades....

"The first Great Depression was not just the result of mistaken policyduring the initial banking crisis; it was caused by ten years ofinadequate policy response. If the government had pursued sufficientlyaggressive stimulus at any point in the 1930s, it could have restoredthe economy to full employment long before World War II forced suchstimulus on the country. By the same token, failure to rescue the banksin the fall of 2008 would not have necessitated ten years of stupidpolicy; a second Great Depression was never in the cards.  {My note: an inadequate policy response by the GOP]

"The real story is a very simple one of a burst housing bubble. At itspeak in 2006, the wealth created by that bubble and the smaller bubblein nonresidential real estate was generating more than $1 trillion inannual demand. This took the form of more than $500 billion in excessconstruction demand, as builders rushed to complete projects thatcommanded bubble-inflated prices. It also led to more than $500 billionin additional consumption, as people spent based on $8 trillion worthof bubble-generated home equity.

"As much as economists like to pretend to be sorcerers, they have noeasy way to replace $1 trillion in annual demand. The Obamaadministration's 2009 stimulus package went perhaps one-third of theway, but it was nowhere near large enough.

"This brings us to the question of why we got the housing bubble inthe first place, which goes directly to the issue of inequality. In thethree decades after World War II, there were no notable bubbles in theeconomy. Productivity growth translated into wage growth, which in turnled to more consumption. The increased demand led to more investment,productivity growth and wage growth.

"This virtuous circle was broken by Reagan-era policies intended toweaken the power of ordinary workers. Wages no longer kept pace withproductivity growth, eliminating the automatic link betweenproductivity growth and demand growth. This led to excess capacity inthe economy, which was filled in the 1990s with demand generated by thestock bubble and in the 2000s with demand generated by the housingbubble.

"If the institutional changes of the Reagan era had not weakenedworkers' bargaining power, these bubbles would not have been possible.Demand would have kept pace with output capacity. The Fed would nothave felt the need to lower interest rates to sustain demand.Furthermore, if the Fed had any concerns about inflation, which in thatenvironment would have been driven by wage growth, it would never havelowered interest rates, as it did in the 1990s and even more in thepast decade. Low interest rates alone cannot be blamed for the stockand housing bubbles, but it is safe to say that these bubbles could nothave arisen in a high-interest-rate environment.

"In short, rising inequality is at the center of the current economiccrisis. And since that increase in inequality was not a natural processbut the result of conscious policy, it can be reversed. Some of theremedies are well-known......

"A small tax on financial speculation would go a long way towardmoderating the multimillion-dollar salaries on Wall Street. The taxrates being discussed in Congress would raise trading costs only backto the level of the late 1980s or early '90s, but they would take ahuge bite out of profits from the short-term trading at which the WallStreet crew excels.

"It is not difficult to develop policies to reduce the inequality thathas given us a crisis-prone economy. The problem is getting thepolitical will."

Unfortunately,we have neither a 21st century New Deal FDR or another Great SocietyLBJ, nor a real Democratic controlled Congress but milquetoast DINOswith no political will for the common good caving to and allowingminority obstructionist, destructive Republicans to effectivelyeliminate government of, by, and for all the people and replace it withgovernment of, by, and for the wealthy few.