Back to one of my favorite themes… If you want to understand the increase in income inequality over the past few years, look no further than this chart (which I have taken from Zero Hedge). For those who don’t intuitively draw the obvious conclusions, let me spell it out for you. Quantitative easing (as reflected in Federal Reserve assets) drives up stock and bond prices. The Top 1% own the vast majority of stocks and bonds; they enjoy major capital gains, which they report as income. The rich get richer. But QE represses interest rates, which punishes small savers with money in banks and money market funds. The middle class and working class get zilch. Actually, they get less than zilch. A 1% interest payment on a bank CD lags the inflation rate. The little guy actually loses wealth.
Can we please stop pretending that the answer is higher tax rates and Congressionally designed wealth transfers? The biggest wealth transfer of all is staring us in the face. Wind that down, and you’ll see a big reduction in income inequality.
— JABThere are currently no comments highlighted.