Let's take a break from big government and talk about losing wealth in another way. Ever see a flock of birds all take flight within a split-second of one another? That's how the stock market works sometimes.
Take short selling. Without explaining it completely, this involves not buying, but borrowing shares of a stock for a short time as a kind of reverse bet: If the stock price goes down, the short seller profits. If it goes up, they see a loss.
A variation of the idea is to spread a nasty, untrue rumor about the company to help drive the short sell stock down and make a profit. That's illegal, but it happens.
Another more covert scheme could go like this: Let's say a few very, very large investors are close friends (they would be. After all, birds of a feather flock together). They observe that the market has entered a very volatile, jumpy phase. Together they agree to sell chunks of stock all at the same time. Much like a few birds on the sidewalk taking flight. Then the rest of the already nervous flock, the individual and institutional investors, would see a downward price trend and take the same action a split second later. Stocks would fall much more. At the right time, the circle of friends would then step in and buy stocks again, this time at much lower prices. The spike in buying would cause a rising price trend. Other investors would again jump in and drive prices up to about where they were in the first place. The difference is that the wealthy few made big money. On average, the little guy lost the initial spike at the beginning of the downtrend plus the spike at the beginning of the uptrend. Some lost more than others, depending on timing. There would be millions of losers. The wealthy could repeat as needed until the retail investor gives up in disgust.
I've done the same thing with my dog outdoors: Fade, lunge and chase her, getting her to act wildly. It's great for laughs and good excercise. She constantly adapts to my actions, so I have to keep adjusting my technique. The wealthy investors similarly play with the markets, laughing at the crazy ways it responds until they figure out how to make it work for them, and it wouldn't take long. They could time their moves to negative and positive investment news for greater effect. There's nothing illegal about it.
Small investors are especially susceptible to this type of manipulation, since they try to be on the leading edge of new trends. Many see the old buy and hold strategy as broken, forcing them to almost try to be day traders. They are looking for subtle signs to act upon before they become big trends. Then they bet big. Unfortunately, they are being played precisely for that reason.
Do I know this is going on? Only by logic: If some kind of manipulation can be done and is profitable, it will be done. Especially if it's legal. They say no one can time the bottom or the top of the market. Unless by such manipulation one is actually creating the peaks and valleys. And it's not just a few good ol boys making a guess, because they have teams of analysts that can measure where and when to have the greatest impact.
What does all this mean? Once the small investor knows this, they can look at events differently, with what I would call enlightenment. This would change the dynamics for the big fellas as they try to figure out a less predictable flock. Until that happens, I stand by helplessly as the little guys lose more money while I, on a wing and a prayer, am making money.
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