Elizabeth Warren says the stock market has become a 'playground for the billionaires.' She's calling for a wealth tax to fix it.

Authored by businessinsider.com and submitted by mephisto2k2
image for Elizabeth Warren says the stock market has become a 'playground for the billionaires.' She's calling for a wealth tax to fix it.

Sen. Elizabeth Warren of Massachusetts emphasized the need for a wealth tax during an interview with CNBC on Thursday.

Warren said that the stock market is like a "casino" and is not reflective of the actual economy, hurting Americans who are suffering during the pandemic.

Establishing clearer SEC guidelines for market manipulation, along with establishing a wealth tax, would be effective methods to counter wealth inequality in the country, Warren said.

Visit Business Insider's homepage for more stories.

Sen. Elizabeth Warren of Massachusetts stressed the need for a wealth tax to counter wealth inequality in the country during an interview on CNBC on Thursday.

Brought on to discuss the GameStop trade that shook the stock market in the last two weeks, Warren told CNBC's Wilfred Frost and Sara Eisen that the Securities and Exchange Commission needs stricter and clearer rules on market manipulation. Without them, she said the stock market is like a "casino" and is not reflective of the state of the economy. Warren also cited the importance of new stimulus checks.

"But the stock market, which has become the giant casino and playground for the billionaires, just keep spinning upward," Warren said. "That means that our real economy has ...really become detached from where the stock market is and the real economy right now is suffering. Stimulus checks are a way to deal with that."

Read more: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital's short positions

With so many Americans filing unemployment claims during the pandemic, Warren said, and with a 20% unemployment rate for Americans making less than $40,000 a year, a two-cent wealth tax on the top tenth of one percent of families would counter wealth inequality and distribute some of the benefits of a soaring stock market.

Warren has long advocated for a wealth tax as a way to increase economic equality. According to the Institute for Policy Studies — a progressive think tank — the 400 richest families in America own more wealth than all Black households and a quarter of Latino households combined. When speaking of the consolidated wealth in the country, the Senator said that "a lot of the wealth is quite visible and easy to see, it's right there in the stock market."

She said: "A two-cent wealth tax changes this country fundamentally because it means we say as a nation, we are going to invest in the next generation. We're going to invest in creating opportunity not just for a handful at the top, we're going to create opportunity for all of our kids. That's how we build a strong future in this country."

Congress plans to hold hearings on the stock market following the drama around the GameStop trade this week.

SucculentStanley on January 29th, 2021 at 18:57 UTC »

There was never a point at which "the stock market" as we know it wasn't a playground for the super-wealthy. There has never been a point at which derivatives weren't used to corner markets, and there has never been a point at which speculation didn't create asset bubbles that imperiled working people.

People who work on Wall Street, or wish they did, always argue that what they do is essential to the economy--that options trading supplies necessary liquidity, for example. They use confusing jargon that they don't even understand to obscure the reality that there is no more proof of this than there is for trickle-down economics. It is a fucking dogma.

On the other hand, there is proof that the maniacal trade of complex financial instruments by a wealthy and irresponsible few can--and has, and will--destabilize the economy and lead to catastrophe for the rest of us. Prior to the Great Recession, the insurance market for mortgage-backed securities was 20X the size of the housing market itself. And when the bubble burst, $5 trillion disappeared from regular people's balance sheets--pensions, retirement funds, home values. All because of a few thousand people working on Wall Street who believed (correctly, as it turns out) that they would never have the pay personally for the risks they were taking.

We need a fundamental shift in the way we think about risk management in our economy, because right now, the incentives are rotten to the core. A wealth tax might be a good idea for other reasons, and I favor it, but it will not address the basic problems with our financial markets.

Gambit08 on January 29th, 2021 at 18:19 UTC »

Carl Icahn screws over Bill Ackman’s short of Herbalife and he’s touted as a genius. Little guys say “okay then we’ll do the same thing with GameStop’s stock” and Wall Street suddenly calls foul and trading is stopped on Robinhood? Game is absolutely rigged.

Edit: 4 spel gud

Kamanar on January 29th, 2021 at 18:17 UTC »

When wasn't it a playground for the rich?

As seen, as soon as the plebs figure out how to do more than touch a few grains of sand, they want to pack up the entire playground and move.