You have correctly identified EXACTLY what the problem is.
However, you have erred in identifying the sources of the problem. Every administration from Reagan, to Bush, Clinton, Bush and Obama have contributed continuously to the problem... and, of course, the problem is deeply rooted in Congress and legislated into being.
The situation that exists is precisely the most telling instance in which the mantra of independents and libertarians claiming "there is no meaningful difference between the parties" is most accurate.
The ICT revolution is profoundly deflationary. The impact, however, is not linear with Moore's law, as there is clearly a parallel impact that exists in enhanced productivity creating more wealth, not only more operations.
The deflationary impacts of ICT are broadly felt, across the economy... however, in a free market, the impact of unfettered innovation and competition (and not the Microsoft euphemisms for those offered in apology for monopoly) in the ICT industry itself would gut corporate profits... at a rate which might exceed Moore's law, with each increment proving discontinuous in relation to legacy technology... and business profits. To prevent that result, it is necessary to obstruct the operation of the market... and that the ICT industry does as a matter of routine...
However, it is not the impact of monopoly behavior apparent in the ICT industry that is the source of the problems, rather than the parallel that exists to the ICT industry's obstructions of the market... in the world of finance.
The source of ALL of the problems in the market today... are apparent in the Wall Street banks responses, and those of their lapdog regulators, to the IPO of Spring Street Brewing.
The technology, today, requires that we no longer have a need for investment banks... just as shopping on the internet obviates the need for intermediaries in many other businesses.
The primary purpose of our markets, of course, is to enable raising capital that funds innovators in innovating, and allows new businesses to enter markets, compete, and succeed. The market does not exist in order to help raise rents that enhance the profitability of banks, or to enable stock portfolio trading, or derivative based speculation, etc... instead of REAL investment.
Because of ICT, every company, today, is easily capable of raising capital directly... without using a bank. And, every trader is capable of executing trades directly, without using a broker as an intermediary. The need for Glass-Steagall, which used to work by isolating bank deposits from the risk taking of the investment bankers, is able to be eliminated... because we no longer have any apparent utility in or need for the investment bankers... who run the banks.
However, that would be inconvenient in relation to sustaining banks profitability, even though their profits are far more about management of other functions in the market than about raising capital, and enabling new businesses to succeed. But, enabling ICT based market efficiencies, would ALSO eliminate most of their utility in other roles across the market, including eliminating a need for their controlling authority over the conduct of the economy...
Instead of adopting the greater efficiencies possible in capital markets, which would allow any company to directly raise capital on the internet without needing a bank... the bankers have instead regulated to prevent that ICT based efficiency from occurring... instead, they have more sharply limited market access, and RAISED the tolls charged to gain access to the financial interstate. The value being added by them, is now essentially zero, in market terms (although grossly negative in policy terms)... while they're reducing access and charging more... a vastly larger percentage in equity... than ever in prior history.
As a result, our capital markets... no longer resembling free markets... have failed.
And the banks (and regulators) response to the failure of the markets... rather than allowing the failure to be recognized, and rather than enabling the introduction of market efficiencies (and regulations) that would re-enable free market functions... is that we have instead enabled the banks in sustaining their failed institutions and excess rents... by allowing them to directly attach the flow of tax revenue... and exert even greater control over the economy.
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