The Pecora Commission investigated the stock market crash and
uncovered a wide range of abusive practices on the part of banks and bank affiliates. These included a variety of conflicts of interest such as the underwriting of unsound securities in order to pay off bad bank loans as well as "pool operations" to support the price of bank stocks.
testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry after he admitted under examination that he and many of his partners had not paid any income taxes in 1931 and 1932.
The Repulican Presidents then and now, believed that government's primary purpose is to help maximize profits for big business rather than to protect consumers or small businesses.
Much of the financial prosperity of the roaring 20's benefited only the financial elites.
Liu states that a similar "policy blunder of neglecting the public sector" has prevailed for the last 20+ years.
Conditions in the US were substantially different by the 1920's (and in the present day) from the 1790's and the late 1860's when government policy was needed, to protect the young republic and help it grow, and later to transition it from an agrarian to an industrial society.
The problems when wealth is concentrated in the hands of the few while the rest of the citizens are losing ground are mani-fold. People can't buy what they can't afford and when production of consumer goods outpaces the ability of consumers to purchase the goods, profits from manufacturing decline.
When profits from manufacturing decline, the wealthy look elsewhere to make their money. They invest in speculative financial deals. Bubbles result -- and bubbles always burst. The stock market in the 1920's. Technology stocks in the 1990's. Subprime real estate in the 2000's.
