The Price of Inequality provides numerous examples of vicious circles, in which one action leads to another, which leads back to the first action. For example, as inequality increases, it leads to loss of opportunity, which in turn leads to more inequality. A second example is how inequality fosters instability, which in turn causes more instability, and so forth. This outcome is poor for the 99 percent, but it enriches the 1 percent. Therefore, other vicious circles work directly for the benefit of the 1 percent. For example, when banks take risks and get caught, they are fined, so they take more risks, get caught, and are fined, and so on.

Stiglitz also examines how the poor also get caught up in vicious circles, especially when they are anxious and stressed about not having the money they need. This stress can actually limit their ability to make good decisions that might improve their situations, and it actually makes bad situations worse.

These vicious cycles mirror Stiglitz’s larger argument that market failures caused by bubbles tend to recur with the same kind of dynamic. Banks, the Federal Reserve, and government policymakers missed the tech bubble in the 1990s, and they all missed the housing bubble in 2007.