The new Rich List is out — yet another example of financial pornography. While nearly 15 million Americans still can't find jobs due to the 2008 Wall Street-created crash, the top hedge manager, David Tepper, earned $1,057,692 an HOUR in 2012 — that's as much as the average American family makes in 21 years!

America's new math: 1 Wall Street hour = 21 years of hard work for the rest of us.

Together the top 10 hedge fund managers waltzed off with $10.1 billion in 2012, which is more than enough to hire 250,000 entry level teachers or 196,000 new registered nurses.

It's not just that these financial gurus are filthy rich. It's that they are the richest of the rich and we don't even know what they do. Overall, hedge fund managers make 50 to 100 times more than our top athletes, movie stars, CEOs, lawyers, writers, doctors and celebrities. Yet, their activities are treated like state secrets.

So what is a hedge fund? No, it has nothing to do with the wholesale garden supply business. Nor does all that money come from hedging against unforeseen negative economic events. Rather, hedge funds are investment vehicles for the super rich — for "sophisticated" investors and institutions who have the resources to gamble for ultra-high returns.

Are you worth what you earn?

In a capitalist society your value is determined by what the market says you're worth. The market is not supposed to pay you billions unless you're producing enormous amounts of value for the economy. Bruce Springsteen makes a good living because people like his songs, buy his records and attend his concerts. We give him money, he gives us entertainment.

But not every market transaction is such an obvious fair exchange of value. Monopolies can jack up prices to make extra profits without increasing the value produced. It is also possible to lie, cheat and steal your way to riches without producing any economic value at all. And as we learned during the Wall Street crash, the creators of toxic assets produced an enormous amount of negative value for society even as the "market" paid them enormous sums.

So do hedge funds produce economic value or are they ripping us off?

Hedge fund managers don't sing, act, hit baseballs or make movies for a living. Actually, obtaining reliable information about what they do is really hard to come by. (It took nearly two years of research for How to Make a Million Dollars an Hour before I could chase down just a few of the answers.)

When you read media reports it always sounds like top hedge fund managers are just the very best at buying low and selling high. We're told that investors like Tepper were smart enough to load up on Apple, Inc in 2012 while everyone else was worried that the Euro crisis would crash the markets…and so on. Maybe that's true. But we have no way to really check out what a particular hedge fund does on a day to day basis. That's proprietary information. Instead we need to step back to examine the hedge fund business as a whole, and then ask two basic questions:

How is it possible for hedge funds, most with fewer than 100 employees, to make more money than corporations with tens of thousands of employees? Is there any evidence to suggest that hedge funds succeed in large part because they have found ingenious ways to cheat? If so, how widespread is the cheating?

Hedge funds want to know who wins the race before it is run.

We also are told that these guys (and yes, they are all guys) make big bucks because they're terrific gamblers, the very best poker players in the financial world. But that's a misleading analogy. Evidence suggest that many are more like card sharks. They don't really want to gamble. Instead they always seeking to bet on a sure thing. Better yet, they would prefer to create a rigged bet. Sounds far fetched? I'd wager that the financial maneuvers I'm about to list understate the severity of hedge fund cheating. (For more detailed information please see my workshop on C-Span Book TV.)

1. Insider trading. Many hedge funds (and we don't know how many) make their money through illegal insider tips. If you know something big is about to happen to a company that no other outsider is supposed to know, you're betting on a sure thing. So far U.S. Attorney Preet Bharara has nailed about 70 hedge fund honchos for obtaining illegal tips. The billionaire Raj Rajaratnam tried, found guilty and put away for nine years. And the third richest hedge fund earner in 2012, billionaire Steven Cohn, is watching as several of his high-level employees succumb to federal indictments. He could be next.

How endemic are these crimes? We can only speculate, but this much is clear. It's very hard to nail someone for insider trading. So the odds of ever getting caught are slim given that there are 9,000 hedge funds. But perhaps we should listen to the man closest to the prosecutions:

"Given the scope of the allegations to date, we are not talking simply about the occasional corrupt individual. We are talking about something verging on a corrupt business model." — U.S. Attorney Preet Bharara, NYT, May 27, 2011

2. Design financial products to fail so you can collect the insurance. This was the game of choice before and during the housing bubble. We know for certain that hedge funds colluded with big banks to create mortgage-related securities that were designed to crash and burn, so hedge fund investors could bet against them. In fact, the hedge fund bettors designed the bets by assembling the worst mortgages they could find to place into the securities.

Sounds strange? It is. In fact, nowhere else in capitalism is something this shoddy permitted. It's precisely like designing and building a home to fall down in six months so that you, the seller, can collect the insurance. Goldman Sachs, JPMorgan Chase and Citigroup have paid over a $1 billion in SEC fines for misleading investors about these shoddy deals. But their hedge fund partners made billions on the insurance and didn't have to cough up a dime in penalties.

Not only did these deals defraud investors, but overall they puffed up the housing boom and then accelerated the crash. Without any exaggeration, these scams had no positive redeeming value for the economy. We're talking pure rip-off.

3. Manipulating the media — rumor mongering. If you're really clever you can slip phony tips to gullible reporters; information that is designed to assist your betting strategies. For example, you can set off rumors about a particular bank's solvency while you're betting against that bank. If you can help set off a bank run, so much the better, because then you can really win big. However, rumor mongering violates the law…if you're caught.

What evidence do we have that this really goes on? Ask Jim Cramer, the frenetic star of "Mad Money." Over a decade ago he ran a very successful hedge fund. Years later he admitted during an online interview (transcript here) that he fed false rumors to his comrades at CNBC so Cramer's hedge fund could cash in on them. (The statue of limitations had already run when he confessed his sins.) Furthermore, he said point blank if you're not willing to violate the rules, "maybe you shouldn't be in this game."

4. High frequency trading. Here's a game for fun and profit that is both legal (for now) and foolproof. You set up your ultra-high-speed computers right next to the stock exchanges so that you get the feed a few nanoseconds before the rest of the world. Then with the help of expert programmers you use that information to automatically jump in ahead of normal investors, so that you buy stocks that others want, jack up the price a little bit and then sell them back to these normal speed buyers. This means that when the rest of us hit the buy button on E-Trade, a high frequency algorithm has probably jumped in there before us, bought the stock we want, and is selling it back to us for a few pennies of profit. They do this millions of times a minute, racking up from $5 to $20 billion a year. It's like a hidden private sales tax that goes into the pockets of high frequency traders. Our pension funds and 401ks are fleeced as well.

A Tax Break for Hedge Funds

And the list goes on and on. Some maneuvers are ethically challenged but legal. Other's are borderline. And some are flagrantly in violation of law. But in any event, most Americans would call it cheating. And to add insult to injury, hedge funds have a special tax break called "carried interest" which allows the richest of the rich to pay a lower tax rate than the rest of us.

Halting Runaway Inequality

Not only are we victims of the cheating and the tax breaks, but also, these outrageous incomes distort our entire income distribution. The more these guys make, the more every CEO desires (would Freud call it hedge fund envy?). Corporate compensation committees don't want to lose their talented executives to hedge funds, do they? So up and up go corporate compensation packages. In 1970 the top CEOs averaged $45 for every dollar paid in worker wages. By 2006 the ratio jumped to $1,723 to $1.

The solutions are straightforward:

1. Get rid of the carried interest loophole. The Obama administration now claims at long last to support the elimination of this outrageous loophole. But don't hold your breath. Instead of cutting back Social Security, the President should demand an immediate vote on this loophole all on its own. It might prove extremely embarrassing (and revealing) for members of both parties who for so long have quietly blocked its elimination. Voting on this loophole should become a litmus test of whether a politician is for Main Street or Wall Street.

2. Support the Robin Hood Tax. National Nurses United is leading the charge for a small tax on all sales of stock, bonds and derivatives. They aptly call it "A Sin Tax on Wall Street." Eleven other nations are instituting such a tax which would go a long way toward putting the high frequency vultures out of business, as well as moving significant sums from the bloated financial sector to the rest of the economy. The nurses union is sponsoring a march in Washington on April 20. We all should be there. (See robinhoodtax.org)

3 Full disclosure. We need to shine a bright light on what these hedge funds do. Many are so large they could have an enormous negative impact on the economy if their bets go wrong. We need to know exactly how they make their money. If revealing those "trade secrets" undermine their profitability, so be it.

Of course, none of this will come easy. But sooner or later, the American public will act on what they already sense: we are fleeced each day in a myriad of ways by the big banks and hedge funds.

Get ready.