There is an urgent and widening divide in America between the “rich class” and everyone else.  It’s not just about who owns what—it’s about how the rules are written, who writes them, and how the costs of bad policy are socialized while the gains are privatized.  The divide persists because systemic damage is papered over with debt and inflation.  On the surface, this postpones pain; underneath, it entrenches privilege.  The status quo of the last 115 years has been the objective since the Federal Reserve System was established.

Below, I walk through the mechanics—financial leverage and financial repression—and then propose practical, achievable reforms to make the system more transparent, less captured, and more aligned with broad-based prosperity.

Debt and Inflation: Friends of the Wealthy

Debt and inflation are often celebrated as tools of growth and stabilization.  In practice, they tend to transfer purchasing power from wage earners and savers to asset owners and borrowers, exacerbating the financial divide.

• Debt fuels asset price inflation: When credit is cheap and abundant, capital chases scarce assets (equities, real estate, private markets), boosting the wealth of those who already own them.  Wages don’t keep pace with asset appreciation.
• Inflation quietly taxes cash balances and fixed incomes: Households living on savings or paychecks lose purchasing power, while leveraged asset holders benefit when the real value of their fixed-rate liabilities shrinks.
• Policy reflex: When downturns appear, the default toolkit—lower rates, more liquidity, targeted backstops—protects balance sheets at the top while pushing diffuse costs (currency debasement, higher living costs) onto everyone else.

Financial Leverage vs. Financial Repression

Financial Leverage (Private-Sector Tool)

• Borrower-driven: Individuals or businesses voluntarily take on debt to magnify returns.
• Purpose: Use borrowed funds to acquire productive assets or expand operations—expecting returns above the cost of capital.
• Risk & Reward: Upside is greater profits; downside is accelerated losses, insolvency risk, and default.
• Examples: A manufacturer financing a new line; an investor using margin to enhance equity exposure.

Financial Repression (Policy Toolkit)

• Government-driven: A suite of policies that suppress interest rates and channel savings toward public debt.
• Purpose: Lower sovereign borrowing costs and reduce the real burden of existing debt.
• Effect on others: Savers and long-term fixed-income investors receive returns that lag inflation, erode purchasing power, and distort capital allocation.
• Examples: Interest-rate caps; reserve requirements or liquidity rules that force institutions to hold government bonds; regulatory preferences for sovereign debt; captive domestic investor bases.

The bridge between the two:

When repression pushes rates below market-clearing levels, leveraged actors (with access to cheap credit) extract outsized gains while savers (who supply that credit, often involuntarily) bear the cost.  This is effectively a transfer from the broad public to well-positioned asset holders.

“Artificially Low” Rates as a Hidden Tax on Savers

When policy or regulation holds rates below their natural market level, you create a wedge:

• Savers earn less than a market return on deposits or bonds.
• Borrowers (often large corporations, private equity firms, and governments) pay less than the market price for capital.
• Result: A stealth tax on prudence and a subsidy for leverage.
• Over time, this punishes thrift, rewards risk-taking with other people’s money, and inflates asset values, widening inequality.

The Political Economy of Capture

• Lobbying overrepresentation: The halls of Washington, DC, are full of lobbyists and trade associations whose job is to secure favorable rules, carve-outs, or backstops.
• Representation gap: The bottom 70%—workers, small savers, and small businesses—lack comparable access or coordination.
• Voting vs. governing: Voters select candidates; donors and policy networks often shape agendas.
• The revolving door between Congress, agencies, K Street, and industry reinforces the cycle by promising future compensation for present-day compliance.
•  “K Street” refers to a major thoroughfare in Washington, D.C., that has become a shorthand term for the United States’ lobbying industry. 

How Do We Change a System Built on Cronyism?

We need reforms that tackle

·        The legal architecture that concentrates risk and power,

·        The money-and-politics nexus,

·        The information asymmetries that make capture invisible to the average citizen.

Fifteen Reforms for Transparency, Accountability, and Market Neutrality

·       Eliminate Joint and Several Liability in Civil Actions (Targeted Tort Reform)

·       Why: Joint and several liability can turn deep pockets into insurers of last resort, regardless of proportional fault.

·       This distorts risk, inflates settlement dynamics, and encourages litigation strategies that prioritize capital over culpability.

·       Replace with: Proportionate liability—each defendant pays damages in line with their proven share of responsibility, coupled with narrowly tailored exceptions (e.g., intentional torts, fraud).

·       Revolving-Door Cooling-Off Periods—With Teeth

·       Extend and enforce multi-year bans on lawmakers, senior staff, and regulators lobbying or accepting compensated roles in the industries they just oversaw.

·       Mandatory disclosures of job negotiations while in office, and post-employment income transparency for five years.

·       Real-Time, Machine-Readable Political Money Disclosures

·       24–72-hour reporting windows for all campaign contributions, PAC spending, and independent expenditures.

·       Unified, searchable, open-data format so journalists and voters can follow the money without forensic skills.

·       End Targeted Corporate Subsidies and Tax Carve-Outs

·       No more firm- or sector- specific giveaways (credits, grants, bespoke regulatory exemptions).

·       Replace with neutral, broad-based tax simplification that lowers rates while eliminating loopholes—so markets, not lobbyists, choose winners.

·       Subsidy Sunsets + Independent ROI Audits

·       Every subsidy or industrial policy program must have:

§  Automatic 3–5-year sunsets,

§  Ex-ante objectives, and

§  Independent ex-post evaluations (jobs created, productivity, spillovers, fiscal cost).

·       Programs failing cost-benefit tests expire by default.

·       Hard Transparency in Procurement and Grants

·       Publish line-item contracts, bids, scoring criteria, and conflicts-of-interest statements in standardized, downloadable formats.

·       Require beneficial ownership disclosure of all vendors and sub-vendors above a threshold to deter shell-company favoritism.

·       Beneficial Ownership Registry, Publicly Searchable

·       Extend and strengthen disclosure so authorities (and ideally the public) can see who controls entities receiving public funds, licenses, or regulatory preferences.

·       Lobbying 2.0: Expand the Definition and Close the Loopholes

·       Capture “strategic consulting,” think-tank “fellows, and legal advisory that function as lobbying by another name.

·       Unified registry, activity logs, and fee disclosures; prohibit contingency fees on legislation or regulation.

·       Neutral Capital Rules: Stop Privileging Sovereign and Select Corporate Debt

·       Phase out regulatory risk-weight preferences that over-incentivize banks and insurers to hold specific government or quasi-government paper.

·       Align capital charges with actual economic risk and allow market pricing to discipline both public and private borrowers.

·       Index Savings for the Bottom 70%

·       Offer inflation-protected savings instruments (auto-enroll, portable) with low fees and small-dollar access.

·       Provide tax neutrality for modest savers—so the public isn’t forced into risk assets to avoid erosion.

·       Debt Brake + Countercyclical Rules for Fiscal Policy

·       Adopt a fiscal rule that caps structural deficits over the cycle while preserving automatic stabilizers during downturns.

·       Independent fiscal council publishes real-time dashboards on compliance and long-term debt sustainability.

·       End Emergency-Use “Shadow Budgets”

·       Emergency borrowing and special facilities must carry explicit path-to-normalization plans, published metrics, and time-bound authorities.

·       Any extension requires an affirmative vote with a new, evidence-based justification.

·       Competition by Default: Presumption Against Anti-Competitive Mergers in Regulated Sectors

·       Utilities, finance, health care, and defense procurement accumulate political power as they consolidate.

·       Strengthen ex-ante merger review, require public-interest tests, and impose behavioral remedies or structural separations where capture is evident.

·       Open Data Mandates for Policy Models

·       If a rule or subsidy relies on a model, publish the assumptions, datasets (de-identified), and sensitivity analyses.

·       This allows independent replication, reduces “black box” policymaking, and deters rent-seeking via opaque analytics.

·       Citizens’ Right-to-Know: Policy Impact Statements for Households

·       For significant fiscal/monetary/regulatory changes, require plain-language Impact summaries:

·       Expected effects on inflation, wages, savings returns, mortgage costs, and small-business credit.

·       Communicate trade-offs before adoption, not after the fact.

Closing Paragraph

The divide between the wealthy class and everyone else is not an accident; it is the predictable outcome of policies that reward leverage and penalize thrift.  Debt and inflation have become silent partners of privilege, eroding the real returns of savers while inflating the value of assets held by the few.  Financial repression may appear to be a technical tool, but its social consequences are profound: it shifts wealth from households to governments and corporations under the guise of stability.

 If we want a system that serves the many rather than the few, transparency and accountability must replace opacity and capture.  Reform is not about punishing success—it is about dismantling the hidden architecture that turns economic policy into a wealth transfer mechanism.  Until that happens, the gap will widen, and the promise of broad-based prosperity will remain just that promise.