The fortunes of the five richest men in the world have “shot up by 114 percent since 2020,” according to a January 2024 Oxfam report on global inequality, while “nearly five billion people have been made poorer.”
This most recent gross increase in wealth and income inequality builds on global trends that took hold in the early 1980s, with the decades-long increase in inequality being particularly large in the United States compared to other developed nations. Wealth inequality is typically higher than income inequality, which in turn feeds higher future income inequality. Indeed, income inequality in the U.S. continues to rise, according to the latest report from the Congressional Budget Office, utilizing data through 2020.
At the same time, and quite unsurprisingly, the largest U.S. banks made record profits in 2023, with JPMorgan Chase reporting $49.6 billion in net income for the year. In the meantime, the Federal Reserve, which world-renowned progressive economist Gerald Epstein calls the “chairman” of the “Bankers’ Club” in his new and path-breaking book Busting the Banker’s Club: Finance for the Rest of Us, has announced that it will keep its benchmark interest rate unchanged following its January 30-31 meeting. The federal fund rates of 5.25-5.5 percent, the highest in 22 years, do not affect Wall Street, the wealthy or powerful corporations, who simply push prices higher to protect profits. Those most adversely affected by the Fed’s current monetary policy are low-wage workers and the poor.
But what exactly is the Bankers’ Club, how does it maintain such firm control of the U.S economy at the behest of the rich and powerful, and who are the “Club Busters” that Epstein talks about in his book? In this exclusive interview for Truthout, which builds on our previous conversation about how “SEC’s Approval of Bitcoin Markets May Set the Stage for Financial Disaster,” Epstein addresses these issues and contends that we can win the fight against plutocracy.
C.J. Polychroniou: Jerry, in your new book titled Busting the Bankers’ Club: Finance for the Rest of Us, which is highly critical of the current banking and financial system, you refer to a Bankers’ Club. Who are its members, what do they do, and how do their actions impact the U.S. economy and society?
Gerald Epstein: The Bankers’ Club is the powerful group of political allies that the finance industry cultivates in order to sustain and augment its economic and political power. Why does the finance industry need political allies? Because, as poll after poll shows, Americans really dislike banks and bankers. Another way to gauge popular sentiment about bankers is to survey Hollywood movies about banks. Every year I ask my students in my “Finance and Society” class to come up with a popular movie that paints a favorable portrait of the finance industry. The best they have come up with is It’s a Wonderful Life, and that is from 1946! Donald Trump in 2015-2016 ran a populist campaign railing against the banks and Hilary Clinton’s connections to them. Of course, as soon as Trump was elected, he became a loyal member of the Bankers’ Club.
Who’s in the Bankers’ Club? Well, first are the usual suspects: the banks and the politicians they pay off to support them — to pass bank-friendly legislation and appoint finance friendly regulators. But there are other members who might be more surprising. Take, for instance, the Federal Reserve. I call the Federal Reserve the chairman of the club: The Fed sees the world through finance-colored glasses. With its monetary policy tools, its regulations and its lender-of-last-resort actions, the Fed often puts the interests of finance ahead of those of society at large. We saw this with the financial bailouts after the global financial crisis of 2008; and we have seen that again in its recent high interest rate policies.
Other key members of the club include many financial regulatory agencies and lawyers that work for them or for the banks. Then, there’s the CEOs of non-financial corporations who often side with the banks. This differs from the........