It is a common claim in classrooms and history textbooks that income inequality was heightening approaching the stock market crash of 1929. Is this even true? And if it is true, does it even matter?
Because the rich tend to obtain more income from their investments than the middle-class or poor obtain from their investments, the stock market boom was a cause of growing income inequality in the 1920s. And the stock boom was, in turn, caused by Federal Reserve monetary inflation and credit expansion.
In booms, income and wealth inequality increase, and in busts, they decrease (unless the Fed re-inflates financial markets as it has done recently).
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