Sharp recent drops in the U.S., Chinese and European stock markets and the large crowds drawn by two very different men seeking to be president, Sen. Bernie Sanders and Donald Trump, point to the same issue: widespread economic anxiety. Government policies — and to some degree, technological changes — are creating tectonic shifts in the global economy, in which we can observe a few gigantic winners while most strivers get little for their labor. Social unrest is on the rise in China and Europe because of wage cuts and job instability. That induces continual anxiety, occasional fear and, at the moment, outright panic among heavily leveraged hedge funds and other stock traders. Although the news coverage is clamorous, the stock market will recover. Monday’s sudden stock market drops from Beijing to New York simply reflect the leverage of high-speed traders, many buying shares with $30 of borrowed money for every $1 of equity. With that much leverage, panic easily sets in when stock prices become volatile. Encouraging this reckless behavior are the near zero interest rate policies of the Federal Reserve and other central banks. Artificially low interest rates decrease the costs of speculation and encourage frothing the market for quick profits, enabling traders and their clients to accumulate money without creating wealth. This scenario is entirely preventable: If the government limited stock trades to ban or minimize borrowed money, there would be less speculation and less instability. In the long term, stock prices would move in greater accord with the profits and expected profits of each company. But politicians everywhere listen intently to the traders, who call for continued easy credit and little regulation, asks accompanied by campaign donations that drown out proposals by those of us who argue that sound regulations promote wealth creation, growth and stability.

To lessen widespread economic anxiety, the political donor class must support electable candidates committed to balanced government economic policies.

FRED