ABSTRACT

This chapter emphasizes that a major cause of the Great Recession was the rapid increase of inequality during the Bush Administration. Four long-run trends operated for a considerable time before the Great Depression and the Great Recession in order to create the conditions for a depression. The four trends were: rising inequality, a crisis in housing, a fragile financial system, and similar problems in the rest of the global economy. If wages and salaries have slow growth, while profits on new investment rises rapidly, then there must be an increase in the inequality of income and wealth. Private investment is driven by the expectation of profit. Outstanding consumer credit rose at a considerable and steady pace both in the average expansion of the Age of Globalization and in the expansion during the Bush Administration. The chapter presents the imports, exports, and the trade deficit over the Bush cycle, including the Great Recession.