Almost all of the wealth in this country's stock market is now owned by the ultra-rich. The richest 10 percent own about 93 percent of all household stock market assets in this country. Axios It was recently reported that it has hit an all-time high.
An analysis of Fed data by the Institute for Policy Studies found that the vast majority of these gains went to only the richest 1 percent. This elite group owns 54 percent of the public stock market, up from his 40 percent in 2002.
The lower half of this country? They own only 1%.
There is a lot of talk about the “democratization'' of public stock markets. The Fed estimates that 58% of U.S. households Several Fund the stock market primarily through retirement funds such as IRAs and mutual funds.
But that hype is missing an important trend. That means almost all of our wealth is controlled by the richest 10 percent of us. Gillian Tett says: financial times“At the very least, this growing concentration deserves more public discussion because it calls into question America's self-image of political economy and financial democracy.”
How can we increase asset ownership for the bottom half of households? One bold solution is to establish savings accounts for children, also known as 'baby bonds'.
Senator Cory Booker and Representative Ayanna Pressley introduced the American Opportunity Act, a federal baby bond bill. Under the proposal, children would be given a $1,000 savings account at birth, with annual contributions of up to $2,000 depending on their family's income.
Once you turn 18, the earnings in these accounts can be used to pay for education, buy a home, or make investments that provide long-term returns. For example, you can invest these funds in mutual funds or retirement funds to grow your non-wealthy nest egg.
Many states, such as Connecticut, and some cities, such as Washington, D.C., have already created baby bond programs. Some have introduced legislation to create them.
Connecticut has a wide range of programs aimed at reducing the state's racial wealth gap and increasing wealth for all low-income households. Starting in July 2023, Connecticut will begin depositing $3,200 into the trust for each newborn born to a Medicaid-eligible household. The program is known by the acronym “HUSKY,” the state university's popular mascot.
Recipients can redeem their capital between the ages of 18 and 30 as long as they remain residents of Connecticut. The value of HUSKY bonds is expected to increase from $10,000 to $24,000 depending on when they are withdrawn. The funds are tax-free for beneficiaries and can be used for investments such as higher education, vocational training, home ownership, and starting small businesses.
Other states that have introduced or are seriously considering baby bond laws include California, Massachusetts, Maryland, North Carolina, New Jersey, Nevada, Washington, Wisconsin, and Vermont.
Innovative programs like this one will help break down the dangerous concentration of wealth at the top of our nation's economic ladder. At a time of unprecedented inequality in this country, this is an idea whose time has come.