e 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. Conversely, the richest 10% in the U.S. on average make 210% of that median earnings level. (Rasmus 45).

He goes on to say that workers have seen few benefits from the boom period. Observing that the median wage had hardly adjusted between 1995 and 2000, Rasmus concludes that “As a whole, workers were now back roughly where they were in 1979.” While highly skilled individuals, as previously noted above, did far better, economic growth from 1995-2000 only left “the larger mass of American workers doing less well and [a wider gap had formed] between them and the more highly educated and better paid” (Rasmus 118). As a side note, while Rasmus would likely approve of the Obama Administration’s reaction to executive compensation, he would probably call for additional regulation to help bolster the working class and reduce income inequality, a negative consequence of the boom.

Critics go even further, suggesting that the boom period’s lax regulatory standards set the stage for the “Great Recession.” This argument is a potent one, and it’s hard to argue that dismantling Glass-Steagall and other regulations did not lead to increased risk-taking by financial institutions. Indeed, one simply has to look at the derivatives market, where the subprime loan crisis took its toll, to see the implications of little regulation. The Economist examined the derivatives market on November 12, 2009 and found that the over the counter (OTC) market, was close to $4 trillion. This market, full of customized, little-understood financial instruments, did not help the financial system during the height of the crisis. Derivatives “concentrated risk as much as they spread it, and amplified bad judgments,” the magazine writes. “Their leverage magnified losses on underlying assets like mortgages and crippled even the biggest firms” (1-2), it continues. The article explains that since the crisis, some suggest clearing OTC derivatives through “central counterparties (CCPs)” to ensure transparency and avoid further meltdowns.

Critics go even further, suggesting that the boom period’s lax regulatory standards set the stage for the “Great Recession.” This argument is a potent one, and it’s hard to argue that dismantling Glass-Steagall and other regulations did not lead to increased risk-taking by financial institutions. Indeed, one simply has to look at the derivatives market, where the subprime loan crisis took its toll, to see the implications of little regulation. The Economist examined the derivatives market on November 12, 2009 and found that the over the counter (OTC) market, was close to $4 trillion. This market, full of customized, little-understood financial instruments, did not help the financial system during the height of the crisis. Derivatives “concentrated risk as much as they spread it, and amplified bad judgments,” the magazine writes. “Their leverage magnified losses on underlying assets like mortgages and crippled even the biggest firms” (1-2), it continues. The article explains that since the crisis, some suggest clearing OTC derivatives through “central counterparties (CCPs)” to ensure transparency and avoid further meltdowns.

The most convincing evidence that activity during the boom set the stage for the downturn can be found in Hyman Minsky’s Financial Instability Hypothesis. Minsky’s argument is simple but compelling. He starts by saying that capitalist societies feature financial intermediaries which are constantly pursuing higher profits. As the business cycle continues, more opportunities for profit emerge, and these corporations tend to take on debt in order to expand and compete. Minsky identifies three forms of debt financing used by corporations: hedge, speculative, and Ponzi. In hedge financing, corporations can fulfill all of their co