Posted on 09/07/2015 7:31:14 AM PDT by Cheerio
A few months ago, a hurt Ben Bernanke put on his blogger hat and set out to explain why, in his mind, the unconventional policies undertaken by the Fed in the post-crisis years have not contributed to record income inequality. As we noted at the time, epic hilarity ensued.
Bernanke’s explanation went something like this: while QE does indeed inflate asset prices, poor people have been getting poorer for quite some time, so sure, maybe the Fed contributed a little bit, but probably not a whole lot and besides, the more Keynes the better when it comes to smoothing out the business cycle and a smooth business cycle is good for everyone. Finally, Bernanke patiently explained that to the extent ZIRP punishes savers it’s nonsensical to mention it in any discussion about income inequality because after all, poor people don’t have savings.
(Excerpt) Read more at zerohedge.com ...
Massive immigration of poor people.
Encouragement of single parenthood.
H1-B visa’s to drive down wages for the middle class.
Exporting US industries to China. Creating more unemployment and driving down wages.
Not teaching financial literacy in school. (How much time do they spend on Political Correctness vs skills that would actually matter).
Do you need more examples?
I'd agree with you if I thought that the system we now have even approximates the free market. But it doesn't. What we have now is a system where interest rates are artificially fixed and fiat is money printed by bureaucrats who work for at the whim of the plutocrats. Hank Paulson - Goldman Sachs CEO and then Treasury Secretary - personifies the utter corruption of our rigged system.
Wealth will always be distributed extremely unequally. This is written in the stars. It's a corollary of the laws of thermodynamics called Pareto's Law. But that's not the question. The whole point of the free market is that wealth should flow to those who create it, and not to those who steal it by seizing control of the mechanism of government and manipulating interest rates and printing fiat money to create asset bubbles that they can exploit, as we have now.
“Eventually, interest rates will have to come up, and it will tank the stock market, hurting small investors who can’t afford to be in hedge funds.”
Do you think that interest rates can ever go up significantly with out bankrupting the Federal Government?
I don’t.
If they DON’T raise the interest rate soon how will they ever pay off debt?
I don’t.
I think it will come along with an official devaluation of the dollar, since there's only so much they can do with devaluing the dollar through QE.
Mark
You and David_The_Reader up in post 13 have pretty much covered it.
The Fed prints money, which it lends to the government at essentially zero interest rates. The money flows into the economy, largely to government, friends of government (e.g., Solyndra) and banks. There is a limit to how much stuff these folks need, so instead of buying stuff, they buy assets, including real estate and stocks, bidding up the price of both, and making them and their friends look richer. Bidding up real estate increases rents, making renters poorer.
Artificially increasing the difficulty of hiring people (through Obamacare and other regulations) increases unemployment, reducing the bargaining power of prospective employees. Etc.
I think your right.
QE, Devaluation, Inflation. One way or another it is a massive wealth transfer from the productive to the government and the politically connected.
Sorry but your response is way to simplistic. If the rich are driving up stocks then those who own them see their own holdings increase. If rents are increasing it is because many more people are renting rather than buying.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.