The great crash will arrive when new political majorities correct income distribution

In most OECD countries over the past 20 years, income distribution has been skewed markedly to the detriment of wage earners and in favour of companies. This has led to low core inflation, which has enabled interest rates to remain low and debt to rise sharply as a result. But this skewing of income distribution to the detriment of wage earners is becoming increasingly unacceptable to public opinion: it increases inequalities and poverty. In all likelihood, there will come a time when new political majorities will be elected on a platform to make income distribution much more favourable to wage earners. This will lead to another “great crash”: Increase in inflation as wages correct upwards; Rise in interest rates, putting borrowers in difficulty and driving up default rates; Collapse in equity markets as interest rates rise above growth rates .