Clearly, there was money to be made in financial markets, and people flocked to the financial sector both for investment opportunities and jobs. The Wall Street Journal reported about the growth and decline of financial service jobs on September 18, 2009. The newspaper writes about how the financial services industry dominated the mindset of jobseekers:

Over the past 20 years, finance grew faster than almost any other sector of the U.S. economy, offering rich pay and luring a growing share of bright minds to trade securities, make loans, manage portfolios, engineer mergers and turn complex mortgages into complex derivatives (Bannon 1).

The Journal goes on to say that creating such complicated financial instruments “drew brainy and aggressive people” and that by 2005 a finance professional earned 30% to 40% more money than engineers with a similar degree level (Bannon 2). It would take an unprecedented recession to halt the growth of this industry, which declined by 4.8% at the end of 2008.

But technological change was not the only driver of the long boom. Government deregulation across the financial sector also contributed to financial market globalization and massive wealth creation. Allen writes that as technology made it easier to make a profit in financial markets, “governments began rushing toward financial market deregulation and internationalization in order to capture a large share of the new profitability for their own money centers, and in order to attract new international funds into their own economies” (Allen 12). The deregulation efforts were spearheaded by Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. “Deregulation was advanced under the consensus that financial market protectionism had failed,” Allen writes, adding that proponents said taxes encouraged people to place their money overseas” (Allen 12). The U.S. ultimately dismantled aspects of the Glass-Steagall Act, which had separated investment banks from commercial banks, in order to make financial institutions more competitive. Likewise, the U.K. followed up with its “Big Bang” deregulation, which “scrapped 85 years of fixed commissions for brokers” (Allen 13). Other countries, not wanting to be left behind, soon followed. In 1986, Canada announced “it would open the highly restricted Canadian financial services industry to unrestricted access by foreigners and Canadian institutions.” Japan by 1984 gave “U.S. banks virtually free access to many Tokyo financial markets, including the underwriting of Japanese government bonds.” Even China and the USSR began moving towards more financial liberalization (Allen 14-15).

Collectively, these moves created a global financial system that greatly expanded the ability to make money while investing. With access to globalized, open markets, investors found it easy to move their money around the world. As they did so, market behavior began to change. Interestingly, as time went on, global interest rates for the same currency eventually equalized; a phenomenon Allen calls “interest rate parity.” Likewise, P/E ratios for U.S., German, and Japanese companies for example, converged, in an example of “financial strategy parity.” The U.S. especially reaped the benefits from deregulation – as mentioned earlier, over $800 billion in foreign savings flowed into the U.S. in 2006 alone, as investors were drawn by attractive interests rates and the opportunity to invest in a growing economy. Indeed, Allen writes that “the removal of structural differences and impediments between financial markets everywhere encouraged a more general foreign buying of America” (Allen 26). Ironically, the U.S. became the world’s largest dissever country, as it sold trillions of dollars in bonds to China and other nations, to finance its growing fiscal expenditures.

While deregulation allowed financial markets to thrive, critics have suggested that unfettered markets were responsible for the country’s economic weaknesses during the boom. They often cite the issue of income inequality, and say that while the boom helped the rich get richer, the poor and middle class were hardly better off. Jack Rasmus’ The War at Home details some of these arguments. Rasmus explains that the Organization for Economic Cooperation and Development (OECD ) compared the economies of several member nations, and found that “Income inequality is high (and rising) in the United States compared to the rest of the OECD” while at the same time “income mobility appears to be lower in the U.S.” (Rasmus 45). One does not need to be an economist to see there is some merit to this statement – after all, executives in the financial services sector frequently earned multi-billion dollar bonuses, and President Barack Obama has appointed a pay czar to address executive compensation for some firms. Rasmus, writing in 2006, observed that the gap between rich and poor was getting worse:

Unlike the other OECD nations, in the U.S. the spread between those with the lowest income and those with the highest is growing rapidly. In America workers in the lowest 10% income range make only 39% of the midpoint median earnings level. Conv