Do you think rising income inequality is an indicator of a coming depression?

Question

Incredibly, the wealthiest 1% of U.S. households owned 38.1% of total marketable wealth in 1998--as much wealth as that owned by the bottom 94% of U.S. households combined. The most recent peak of 38.5% was reached in 1995. That level had been unmatched in the United States since 1929, just before the Great Depression (44.2%).
http://webpages.charter.net/hartgers/wealth/wealth.html

Answer 1

Your question hit on a few things...

This imbalance, just before the Great Depression, was the reason FDR created what is called The New Deal. I like to refer to this as a pseudo capitalist-socialist system. FDR recognized that a pure capitalist system does not work in that throughout history it tended to end with a revolution by the masses. Why? Because of the wage gap you described. Basically what happens is this gap grows and grows and grows until first there is complete dissolution of the middle class followed by a revolt of the masses... a revolution. Following the revolution, socialism usually prevails... ie) France.

Now with all that said, ppl confuse FDR with being a socialist; but, this is far from the truth. He was actually beyond brilliant. He realized that neither pure capitalism nor pure socialism works and thought.... hum how can we devise a system that keeps both sides happy..... hence The New Deal.

You see what his system gave us is a system where the weak and poor have protections from living under bridges while the ppl that seek eliteness can gain wealth through the free market system. The New Deal gave us welfare that helps ppl that find themselves in distressed situations like a mother of 2 whose husband dies; it gave us the social security system that has eliminated elderly poverty; it gave us the SEC.... etc... many many things and most important, it gave us regulations on many things that tend to be controlled by the most powerful.

Now you might be wondering... if we have all this and it was so great then why are we falling back into the same old pattern before this... because the R party has been slowly reversing every piece of The New Deal inch by ince since the mid-90s. They have deregulated and privatized almost everything.

The few things left of the New Deal they tried to reverse but failed... remember Bush trying to give vouchers for private schools. That was the first step in taking money away from public schools in order to privatize it. He tried his best to privatize social security and medicare also.

Now to answer your actual question, since history appears to be repeating itself and the R party has reversed most of the New Deal social protections, yes the rising income inequality is an indicator of a coming depression.

Answer 2

Don't believe income inequality is major factor, but how the wealth was obtained maybe large factor. As Monopolies and trust squeeze the consumer at some point they stop buying. Sending that market in deflation. These greedy people over speculate and cause deep downturn in finical markets. At one time banks would fail. Workers wages were frozen declined or they were out of job this hurt all but one sector or economy. All we need is year of bad crops to hurt another sector. The day may come when government bonds can't be refinanced and defense money will slow. Remember how much better things were a mere six and a half years ago.

Answer 3

Let us not forget that the great depression was enhanced and extended due to the drought, also known as 'the dust bowl'.
I'm sure, too, that that 1% -if accurate- are very protective of their own wealth which means that the rest of us will be protected, as much as that 1% can control it.
The words 'income inequality' always comes across as a jealousy of the wealthy. In America, each one of us have the opportunity to become wealthy. The factors that cause us to not become 'wealthy' are the unwillingness to study long and hard, to search out that one thing we are best at and make ourselves better, to apply ourselves to a dream 24/7 or even have a dream, to focus on working harder and longer and accept that it doesn't happen overnight, fear of the unknown that holds us back for taking chances, and/or live below our means so to accumulate wealth.
Personally, I have worked long, hard hours for the past 35+ years. I was not willing to take that all important chance, but I was willing to live below my means and it paid off. I'm not rich, but I'm comportable and able to help others. That is good enough for me.

Answer 4

seems unrelated to me

i think rising income inequality is caused by rising real incomes in the top 2/3rds of the population while the lowest 1/10th make no real gains at all.

Can't be unsympathetic -- those last 15 million workers have about 15 million illegals here trying to do the same work but for less pay.

not to mention that the bottom 10% always includes the substance abusers and people with mental issues.

Answer 5

No, it's a sign of too many government oligopolies and not enough free market competitive pressures! Unfortunately some will see this as a sign for MORE government and they will force the economy down once again! There is no link between depressions and income inequality but their is a link between big government and poverty!

Answer 6

One of the factors that led to the French Revolution was a society where the wealthy few lorded it over the starving many.
Marie Antoinette's famous "if they can't afford bread let them eat cake" is the epitome of that society.
This may be history repeating itself. I hope not!

Answer 7

I would rather think it is an indicator of coming REVOLUTION!!!

Answer 8

yeah

Answer 9

might be one indicator. the world economy will pop us out of this, quick the wealth over seas will come in and pick up the bargains our government may go bankrupt , when china and japan quit loaning "it" money we will be ok though.


they may need war to bring our government back into power when its helpless with debt and no credit. they will start a war to avoid paying the debt.

The U.S. plans for an attack on Iran envision to sacrifice the US Fifth Fleet in order to justify a nuclear retaliation. This is being discussed within the U.S. Joint Chief of Staff cabinet. According to sources, admiral William Fallon made clear that if such an order was given, he would refuse to follow it and would hand in his resignation along with the entire Centcom headquarter’s. So far only the Navy and Army’s superior officers’ resistance has prevented the administration and the Air Force from launching the operations. The Bush administation is at odds with dissenting Pentagon war games analysis that suggests an attack on Iran’s nuclear or military facilities will lead directly to the annihilation of the Navy’s Fifth Fleet now stationed in the Persian Gulf. Lt. General Paul Van Riper led a hypothetical Persian Gulf state in the 2006 Millennium Challenge wargames that resulted in the destruction of the Fifth Fleet. His conclusions regarding the vulnerability of the Fifth Fleet to an assymetrical military conflict have not stoped the Bush administrations plans. They are currently aggressively promoting a range of military actions against Iran that will culminate in it attacking the US Navy’s Fifth Fleet with sophisticated cruise anti-ship missiles. Iran has sufficient quantities of cruise missiles to destroy much or all of the Fifth Fleet which is within range of Iran’s mobile missile launchers strategically located along its mountainous terrain overlooking the Persian Gulf. The Bush administration is deliberately downplaying the vulnerability of the Fifth Fleet to Iran’s advanced missile technology which has been purchased from Russia and China since the late 1990’s. The most sophisticated of Iran’s cruise missiles are the ‘Sunburn’ and ‘Yakhonts’. These are missiles against which U.S. military experts conclude modern warships have no effective defense. By deliberately provoking an Iranian retaliation to U.S. military actions, the neoconservatives will knowingly sacrifice much or all of the Fifth Fleet. This will culminate in a new Pearl Harbor that will create the right political environment for total war against Iran, and expanded military actions in the Persian Gulf region.

The Fifth Fleet’s Vulnerability to Iran’s Anti-Ship Missile Arsenal
The U.S. Navy Fifth Fleet is headquartered in the Gulf State of Bahrain which is responsible for patrolling the Persian Gulf, Arabian Sea, Suez Canal and parts of the Indian Ocean. The Fifth Fleet currently comprises a carrier group and two helicopter carrier ships. Its size peaked at five aircraft carrier groups and six helicopter carriers in 2003 during the invasion of Iraq. Presently, it is led by the USS Enterprise (CVN-65), the first nuclear powered aircraft carrier commissioned in 1961, and on November 2, began participating in a Naval exercise in the Persian Gulf .

The Fifth Fleet’s base in Bahrain, is only 150 miles away from the Iranian coast, and would itself be in range of Iran’s new generation of anti-ship cruise missiles. Also, any Naval ships in the confined terrain of the Persian Gulf would have difficulty in maneuvering and would be within range of Iran’s rugged coastline which extends all along the Persian Gulf to the Arabian sea.

Iran began purchasing advanced military technology from Russia soon after the latter pulled out in 2000 from the Gore-Chernomyrdin Protocol, which limited Russia’s sales of military equipment to Iran. Russia subsequently began selling Iran military technology that could be used in any military conflict with the U.S. This included air defense systems and anti-ship cruise missiles in which Russia specialized to offset the U.S. large naval superiority.

The SS-N-22 or ‘Sunburn” has a speed of Mach 2.5 or 1500 miles an hour, uses stealth technology and has a range up to 130 miles. It contains a conventional warhead of 750 lbs that can destroy most ships. Of even greater concern is Russia’s SSN-X-26 or ‘Yakhonts’ cruise missile which has a range of 185 miles which makes all US Navy ships in the Persian Gulf vulnerable to attack. More importantly the Yakhonts has been specifically developed for use against Carrier groups, and has been sold by Russia on the international arms trade.

Both the Yakhonts and the Sunburn missiles are designed to defeat the Aegis radar defense currently used on U.S. Navy ships by using stealth technology and low ground hugging flying maneuvers. In their final approaches these missiles take evasive maneuvers to defeat anti-ship missile defenses. So great is the threat posed by the Sunburn, Yakhonts and other advanced anti-ship missiles being developed by Russia and sold to China, Iran and other countries, that the Pentagon’s weapons testing office in 2007 moved to halt production on further aircraft carriers until an effective defense was developed. Iran has purchased sufficient quantities of both the Sunbeam and Yakhonts to destroy much or all of the Fifth Fleet anywhere in the Persian Gulf from its mountainous coastal terrain.

Millennium Challenge Wargames
The “Millennium Challenge” was one of the largest wargames ever conducted and wargames involved 13,500 troops spread out at over 17 locations. The wargames involved heavy usage of computer simulations, extended over a three week period and cost $250 million. Millennium Challenge involved asymmetrical warfare between the U.S military forces, led by General William Kernan, and an unnamed state in the Persian Gulf. According to General Kernan, the wargames “would test a series of new war-fighting concepts recently developed by the Pentagon.” Using a range of asymmetrical attack strategies using disguised civilian boats for launching attacks, planes in Kamikaze attacks, and Silkworm cruise missiles, much of the Fifth Fleet was sunk. The games revealed how asymmetrical strategies could exploit the Fifth Fleet’s vulnerability against anti-ship cruise missiles in the confined waters of the Persian Gulf.

In a controversial decision, the Pentagon decided to simply ‘refloat’ the Fifth Fleet to continue the exercise which led to the eventual defeat of the Persian Gulf state. The sinking of the Fifth Fleet was ignored and the wargames declared a success for the “new war-fighting concepts” adopted by Gen. Kernan. This led to Lt General Paul Van Riper, the commander of the mythical Gulf State, calling the official results “empty sloganeering”. In a later television interview, General Riper declared “when the concepts that the command was testing failed to live up to their expectations, the command at that point began to script the exercise in order to prove these concepts. This was my critical complaint.”

Most significant was General Riper’s claims of the effectiveness of the older Cruise missile technology, the Silkworm missile which were used to sink an aircraft carrier and two helicopter-carriers loaded with marines in the total of 16 ships sunk. When asked to confirm Riper’s claims, General Kernar replied: “Well, I don’t know. To be honest with you. I haven’t had an opportunity to assess what happened. But that’s a possibility… The specifics of the cruise-missile piece… I really can’t answer that question. We’ll have to get back to you”.
The Millennium Challenge wargames clearly demonstrated the vulnerability of the US Fifth Fleet to Silkworm cruise missile attacks. This replicated the experience of the British during the 1980 Falklands war where two ships were sunk by three Exocet missiles. Both the Exocet and Silkworm cruise missiles were an older generation of anti-ship missile technology that were far surpassed by the Sunburn and Yakhonts missiles. If the Millennium Challenge was a guide to an asymmetrical war with Iran, much of the U.S Fifth Fleet would be destroyed. It is not surprising Millennium Challenge was eventually scripted so that this embarrassing fact was hidden. To date, there has been little public awareness of the vulnerability of the US Fifth Fleet while stationed in the Persian Gulf. It appears that the Bush administration had scripted an outcome to the wargames that would promote its neoconservative agenda for the Middle East.

The Neo-Conservative Strategy to Attack Iran
Neoconservatives share a political philosophy that US dominance of the international system as the world’s sole superpower needs to be extended indefinitely into the 21st century. In early 2006 neoconservatives within the Bush administration began vigorously promoting a new war against Iran due to the alleged threat posed by its nuclear development program. Iran has consistently maintained that its nuclear development is lawful and in compliance with the Nonproliferation Treaty (NPT). Since 2004, The Bush administration has been citing intelligence data that Iran is secretly developing nuclear weapons and must under no circumstances be allowed to do this.

Much of Iran’s nuclear development has occurred in underground facilities built at a depth of 70 feet with hardened concrete overhead that protect them from any known conventional attack. This led to the Bush administration arguing in early 2006 that tactical nuclear weapons would need to be used to take out Iran’s nuclear facilities. This culminated in a fierce debate between leading neo-conservatives such as Dick Cheney and Donald Rumsfeld, with the Joint Chiefs of Staff which remained adamantly opposed. Seymour Hersh in May 2006, reported the opposition of the Joint Chiefs of Staff.’
Subsequent efforts by the neo-conservatives to justify a conventional military attack have been handicapped by widespread public skepticism by the threat posed by Iran’s nuclear program, and Iran’s compliance with the Nonproliferation Treaty according to Mohamed ElBaradei, the head of the IAEA. ElBaradei cites U.S. military assessments that Iran is a few years away from developing weapons grade nuclear fuel that could be used for nuclear weapons. The Bush administration, frustrated by the determined opposition both within the U.S bureaucracy, military and the international community to its plans has adopted a three pronged track strategy for its goal of ‘taking out’ Iran.

The first strategy is to drive up public perceptions of an international security crisis by warning of a Third World War if Iran’s nuclear program is not stopped. In a Press Conference speech on October 17, President Bush declared: “if you’re interested in avoiding World War III, it seems like you ought to be interested in preventing them [Iranians] from having the knowledge necessary to make a nuclear weapon.” Bush’s startling rhetoric was followed soon after by Vice President Cheney on October 23 who warned in a speech that the US and its allies were "prepared to impose serious consequences" on Iran. : The second strategy has been shift emphasis from removing Iran’s nuclear facilities, to emphasizing its support for terrorism. Given widespread military and political opposition to attacks on Iran’s nuclear facilities, the Bush administration is now depicting Iran as a supporter of terrorism in Iraq.” The change in strategy was given a powerful boost by the passage of the Kyle-Lieberman Amendment by the U.S. Senate on September 26 which designated “the Iranian Revolutionary Guards Corps as a foreign terrorist organization”. This would enable the Bush administration to authorize strikes against Iranian Revolutionary Guard facilities inside Iran on the basis that they are supporting Iraqi terrorist groups targeting U.S. military forces.

The third and most dangerous strategy used by the Bush administration is to sanction a covert mission that would create the necessary political environment for a war against Iran. This is arguably best evidenced in the infamous B-52 ‘Bent Spear’ incident on August 30, 2007 where five (later changed to six) nuclear armed cruise missiles were found en route to the Middle East for a covert mission. The nuclear warheads had adjustable yields of between 5 to 150 kilotons, and would have been ideal for use against Iran’s underground nuclear facilities or in a false flag operation that would be blamed on Iran. However, Air Force personnel stood down ‘illegal’ orders that most likely came from the White House, and averted what could have been the detonation of one or more nuclear devices in the Persian Gulf region.

Consequences of Iran being Attacked
In an effort to intimidate Iran, the Bush administration has regularly placed two aircraft carrier group formations in the Persian Gulf . The size and timing of possible U.S. military attacks on Iran’s nuclear and/or military facilities, will influence the speed and scale of an Iranian response. Iran’s response will predictably result in a military escalation that culminates in Iran using its arsenal of anti-ship cruise missiles on the U.S. Fifth Fleet and closing off the Strait of Hormuz to all shipping. Iran’s ability to hide and launch cruise missiles from mountainous positions all along the Persian Gulf will make all Fifth Fleet ships in the Persian Gulf vulnerable. The Fifth Fleet would be trapped and unable to escape to safer waters. The Millennium Challenge wargames in 2002 witnessed the sinking of most of the Fifth fleet.

If an attack on Iran were to occur before the end of 2007, it would lead to the destruction of the USS Enterprise with its complement of 5000 personnel on board. Further losses in terms of support ships and other Fifth Fleet naval forces in the Persian Gulf would be catastrophic. An Iranian cruise missile attack would replicate losses at Pearl Harbor where the sinking of five ships, destruction of 188 aircraft and deaths of 2,333 quickly led to a declaration of total war against Imperial Japan by the U.S. Congress.

The declaration of total war against Iran by the U.S. Congress would lead to a sustained bombing campaign and eventual military invasion to bring about regime change in Iran. Military conscription would occur in order to provide personnel for the invasion of Iran, and to support U.S. troops in Iraq and Afghanistan that would come under greater pressure. Tensions would rapidly escalate with other major powers such as Russia and China who have supplied Iran with sophisticated weapons systems that could be used against U.S. military assets. The closing of the Strait of Hormuz to all shipping and total war conditions in the U.S. would lead to a collapse of the world economy, and further erosion of civil liberties in a U.S. engaged in total war.

Conclusions
The above scenario is very plausible given the military capacities of Iran’s anti-ship cruise missiles and the U.S. Navy’s vulnerability to these while operating in the Persian Gulf. The Bush administration has hidden from the American public the full extent of the Fifth Fleet’s vulnerability, and how it could be trapped and destroyed in a full scale conflict with Iran. This is best evidenced by the controversial decision to downplay the real results of the Millennium Challenge wargames and the dissenting views of Lt. General Van Riper over the lessons to be learned. This culminated in General Van Riper joining a group of retired generals in calling for the resignation of Donald Rumsfeld.

Neo-conservatives within the Bush administration are fully aware of the vulnerability of the Fifth Fleet, yet have at times tried to place up to three carrier groups in the Persian Gulf which would only augment U.S. losses in any war with Iran. Yet the Bush administration has still attempted to move forward with plans for nuclear, conventional and/or covert attacks on Iran which would precipitate much of the terrible scenario described above.

A reasonable conclusion to draw is that neoconservatives within the Bush administration are willing to sacrifice much or all of the U.S. Fifth Fleet by militarily provoking Iran to launch its anti-ship cruise missile arsenal in order to justify ‘total war’ against Iran, and force regime change. A new Pearl Harbor can be averted by making accountable Bush administration officials willing to sacrifice the Fifth Fleet in pursuit of a neoconservative agenda.