Inequality of income and the US economic crisis

I came across an article titled 'Spread the wealth' in the recent edition of Outlook Business by Aseem Srivashtava. The author discusses the raising inequality of income and how it caused the financial crisis. I find it brilliant, especially the early parts of the article. He proposes a theory for the current state of affairs in the US economy. I am presenting my understanding of his argument, rather theory, below

In the US, despite productivity gains achieved by businesses, employees haven't gained much. Businesses grew, CEOs and their ilk grew richer, shareholders gained but not the employee who worked for their riches. From 1970 onwards real wages have stagnated however compensation packages of CEOs and managers have grown exponentially. If this is the case how come the economy grew? Where did the money come from for consumers (a big chunk of which are non-managerial employees) to spend if their real wages did not grow? Zero growth in real wages mean the consumer could not have afforded more than what he did 1970. But the US economy witnessed a prolonged boom from 1990s till the sub-prime crisis hit them. What explains this?

Businesses produced and serviced the market (consumers) and earned their profit. Employees were paid less but their working hours increased. Shareholders and the government got their due. Promoters and the management got lot more than what was due to them. This elite group of owners and managerial people channeled their surpluses in the form of lending to common people, who borrowed and spent in order to boost the business and the economy. It was mentioned in the article that 2/3 of dollars spent in US came from consumers and a major chunk of which was funded by credit card companies and banks.

The owners and the lot gained twice, first by exploiting workers by paying sub-optimal wages and secondly by earning return on the money lent to the same men they exploited. The author of the article terms it as a scam that compares with none of the ealier ones that the US economy had witnessed for the sheer ingenuity.

This theory may not completely explain the current crisis faced by the US economy. But then if you are a left leaning person then you will be in the boat with Aseem Shrivastava. The Government was complicit (as is everywhere) through policies that completely shifted the responsibility for distribution of wealth and income into the private domain. They also did not discipline the spending and infact encouraged heavy borrowing through cheap loans, for both the corporate and the individual. After all it is the corporate that funds the campaigns and not the comman man.

It is prudent to tighten the interest rate a bit at the sign of indiscriminate spending. But then that means going against the wind, which not very popular even with the comman man. It is always better to bear bit of toughness when you are on a high than when you are down. Alas, this widom only finds deaf ears. US fed kept the rates low all along the boom period to encourage growth and consumerism. But when the economy needs a real kick on the back, there is not much leeway to reduce rates. After all interest rates cannot go below zero.