Does income inequality lead to bubbles?

I was thinking there was causation through politics. Increased income inequality means that rich people have more money that they don’t know what to do with, so they spend it on buying political power. They use that political power to deregulate, etc. It’s not that complicated.

The recent influx of cash into politics that started in 2004 isn’t a result of any specific ruling or piece of legislation, it’s the result of some people having so much money that they think nothing of spending $10 mill. on Newt Gingrich.

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