From his perch at The Wall Street Journal, Robert Frank has become one of the nation's leading chroniclers of the 1%. He has been the newspaper's wealth reporter for eight years, writing about the lives, culture, economy, spending and investing of the wealthy. His blog, The Wealth Report, was recently named by Time magazine as one of the nation's most influential business blogs.

Following the success of his 2007 best-selling book, Richistan, Frank has published a new book on the American wealthy called The High-Beta Rich, which profiles millionaires and billionaires who lost their fortunes during the financial crisis. Yet the book also introduces the world to a new economic phenomenon: the increased volatility of today's large wealth.

While the top 1% used to be the most stable group on the income and wealth ladder, they are now the most unstable, prone to sudden booms and busts. Frank calls them the "high betas," the Wall Street term for stocks that have extreme highs and lows.

What caused this change in the world of wealth and how does it affect the rest of the economy?

We recently caught up with Frank to get the answer and to learn more about the high betas.

Prince:  What's the thesis of The High-Beta Rich?
Frank: High-Beta tells the story of the increasingly manic nature of today's wealth. Conventional wisdom tells us that the rich just keep getting richer and we often hear in the media about how the wealthy are a protected species that is always getting bailed out. In fact, wealth today is more like a roller coaster than an escalator, and there are people constantly falling into and out of the 1%.

To tell the story, I interviewed more than 100 people with net worths or former net worths of more than $10 million. I tell several of their stories in colorful detail, rolling in stats and analysis from a new area of economic research that looks at the instabilities of modern wealth.

Prince: But hasn't that always been true? Haven't there always been people who get rich quick and lose it just as quickly?
Frank: To a degree, there has always been churn in the world of wealth. Austrian economist Joseph Schumpeter called it "creative destruction," where one sector of the economy replaces another because of business and product cycles. But the cycles of wealth are now far more rapid, extreme and frequent. The old saying used to be "shirtsleeves to shirtsleeves" in three generations. Now it can happen in three years.

Before the 1980s, the top 1% used to be the flat line on the income charts-rising and falling less than the rest of America during economic cycles. Suddenly, in the early 1980s-1982 to be exact-the 1% started jumping off the charts, soaring far higher than the rest of the country during good times and crashing harder during recessions. They became like the binge drinkers of the economy.

Prince:  What caused this?
Frank: Economists don't know. The rise in inequality in America started the same year as high beta, so they are clearly linked. I try to find the answer by interviewing the high betas themselves. And what I found were three principal reasons. First, more fortunes are tied to the stock market. The Dow Jones rose from under 1,000 in 1981 to 11,000 and change today. That fueled the creation of the largest number of new millionaires and billionaires ever in America, with the rise of stock-based pay-and entrepreneurs who started and sold companies, either through IPOs or mergers. Those fortunes, however, are far less stable, since the stock market is up to 20 times more volatile than overall economic growth.

The second reason is debt. The debt levels of the top 1% increased more than threefold since the 1980s, and many of the rich loaded that debt pile onto speculative bubbles or paper wealth. Leverage can be deadly, no matter how much you think is "manageable."

The third reason is spending. Some of the wealthy went overboard with homes, cars, yachts, planes, vacations, handbags, shoes and other luxury goods because they thought they could afford it. As it turned out, many looked rich but were actually living one crisis away from financial collapse. Some of the wealth of the past decade was a mirage.

Prince:  The best parts of this book are the personal stories. Tell us one or two.
Frank: Well, I profile Tim and Edra Blixesth, who were on the Forbes list with an estimated net worth of $1.2 billion. They owned the Yellowstone Club, the private golf and ski resort. They had three private jets, two yachts and an estate in California with a household staff of 110 people. As they told me in 2007, "We'll never really have to worry about money again."

Flash forward to 2010. They divorced and Edra had to file for Chapter 7 bankruptcy liquidation. When I went to visit her at the house, all her staff was gone and the phones were cut off because she couldn't pay the bill. In the book, Edra talks about what it's like to lose everything, and suddenly cook, clean and drive herself and fly on a commercial plane. She has some amazing stories. But in the end, she feels that the wealth loss wasn't all negative-that in some ways, she found herself by losing her fortune.

I also profile a couple in Florida who was building the largest home in America-until they had a cash crunch. The house is now for sale for $75 million. But in the book, I explore their lives and detail the numbers that led them to their current troubles.

Prince:  Are you suggesting we should feel sorry for the high betas?
Frank: Not at all. My approach to covering wealth is never to judge or take a political view but to tell the true, up-close stories of today's rich. Readers can make up their own minds. We shouldn't shed a tear for people whose idea of a life trauma is giving up the Gulfstream and being forced to fly commercial. But high-beta wealth matters because more of our economy depends on this group. The 1% pays 40% of the country's income taxes and they're the biggest spenders. When they take a hit, taxes drop, spending drops and they employ fewer people. My fear is that our growing dependence on the rich will also make the rest of the economy more high beta.

Prince:  What do you think of the so-called "class wars" in America today?
Frank: Politics has turned the wealthy into silly stereotypes-either fat cat bankers who benefit at the expense of the rest of the country or job-creating heroes who will stop hiring or leave the country if they have to pay another dollar in taxes. Neither is accurate. The wealthy are a more diverse group than ever, and on the subject of taxes, they're as divided as the rest of the country. By sticking to this rich-get-richer narrative, the country may be missing the real danger, which is that we're more dependent than ever before on a group that is highly unstable.

Prince: So what's the solution?
Frank: That was the hardest question to answer in the book. To solve the problem of high-beta wealth you have to roll back all the forces that have created inequality. You'd have to roll back all the recent advances in technology, you'd have to roll back globalization and you'd have to somehow wipe out most of the financial markets around the world. Not going to happen. So the practical solution is to better prepare for these wealth and income shocks. Governments need to create bigger, more robust rainy day funds that they can fill during good times and drain down during crises. As consumers and workers, we need to save more, spend less and borrow less to survive these cycles. And for those who aspire to be wealthly, they need to take money off the table as they're on the way up and use debt sparingly. You can't get around risk if you want to get rich today. But you can manage those risks and price it more intelligently.

Prince:  Do you aspire to become wealthy yourself?
Frank: If there's one thing I've learned in my many years of interviewing rich people it's that wealth isn't all it's cracked up to be. It brings terrific freedoms and choices in life. The private jet is the one thing that the rich say they miss when they lose their wealth, and I can see the attraction because you're really buying time and freedom.
But wealth also brings its own problems and anxieties. And in a high-beta world, wealth no longer ensures stability and security in your life. What really matters in this world is doing something you love, having strong connections to family and friends, and making a contribution to your community or the world at large. I feel lucky to have all of those things. My family and two wonderful daughters make me feel like the richest guy in the world. Having said that, I still wouldn't mind having a G550.