ABSTRACT
This chapter aims to combine pluralist and critical political economy, the qualitative methods of historical–institutionalism, and the basic principles of financial balance-sheets and portfolio strategy to better explain how financialization has affected each American social sector. The theory of compounding financialization and the critique of standard economic approaches, especially contemporary banking theory, financial intermediation theory, and endogenous money approaches, helped reveal the long-term causal logic, changing character, and limits to the rise of finance. The chapter reviews evidence from the Congressional Budget Office and Executive Office of Management and Budget on the effect of taxes and social policy transfers in the US from 1979 to 2016. It presents evidence of the re-intermediation of US household financial portfolios at odds with core ideas about efficient markets, contemporary banking theory, and financial intermediation theory. The composition of financial claims also suggests anomalies for theories of financial change in the US toward money managers and disintermediation.
