How the Federal Reserve's QE Has Contributed to Inequality
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- Опубликовано: 2 авг 2016
- People in America get really angry at the Federal Reserve and at the "money system" in general during economic crises. The Fed draws hostility because of its power, its insulation from democratic accountability, its lack of transparency, and because of its historical and structural connections to finance. It has a lot of power in the economy because it has a big impact on the supply and cost of credit, that is, interest rates. It also plays a key role in supervising banks and historically has seemed to take it easy on the banks when it shouldn't have, such as in the lead up to the financial crisis.
But how easy are its policies? Do the complaints directed against the Fed have merit? And have the policies adopted by the Federal Reserve post the 2008 financial crisis actually served to benefit society as a whole? Gerry Epstein, a Professor of Economics at the University of Massachusetts at Amherst, and a fellow of INET, has conducted extensive research which highlights the way the Federal Reserve's policies in the aftermath of the crisis, and concludes that Wall Street and wealthy Americans are in fact the biggest winners from policies like quantitative easing, while Main Street Americans have seen little improvement in their economic lives. A more broadly based fiscal policy response might have engendered a recovery less skewed toward the haves, rather than the have nots. End result? Inequality is getting worse, people are getting a lot angrier and we get political phenomena like Donald Trump. And the Fed's political position has likely been compromised.
Although defenders of the Fed and central bank practitioners in general argue that the distributional impact of policies such as quantitative easing (QE) have probably been either neutral or even egalitarian in nature due to its employment impacts, Epstein maintains in the interview below that these positive impacts were nonetheless swamped by the large dis-equalizing effects of asset price appreciation, which disproportionately benefits the top tier of society. Bankers in particular also experienced statistically significant increases in profitability after controlling for common determinants of bank performance through asset appreciation. And critics, often for good reason, remain legitimately concerned that the Fed is wielding its vast powers in the interests of the banks and not in the interests of the people. Epstein's research seems to bear out this grievance. After the financial crisis, Americans have perceived that the banks have been bailed out, but a significant proportion of the population is still in serious economic trouble as Professor Epstein highlights in the interview. 
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There is a paper by Austrian economist Zoran Balac that was written in 2014 talking about the relationship between monetary inflation & wealth inequality.
This is one of the only truly honest and cogent analyses of QE on youtube.
maybe on RUclips but this does not explain the biggest problem
Look up Gary Stevenson.
How the hell would municipal bonds help small businesses? Our local governments are incredibly corrupt and inefficient. Large amounts of money would be stolen by politicians. Most of the money for infrastructure bills would go to large developers and construction firms. Workers would get only a fraction of that money. Large segments of the population do not work in the trades. Most people are not architects or civil and electrical engineers. Many people would not see any income from these projects and very little of that money would circulate throughout the larger economy. We live in a world where everything people need to live is owned by wealthy individuals and large corporations. The recapture and retention rate of money generated using this fiscal policy would be very high. Debt is debt, at some point real money is needed to repay that debt. Stimulating an economy with debt will always end badly, regardless of wether it goes to the top or bottom. When it goes to the top it causes massive asset bubbles and exacerbates inequality. Even if it were distributed to those who need it most it would still lead to a collapse from the ensuing inflation and massive unpaid debt obligations. The real problem is predation and corruption. It is inherent in the very structure of our economy itself. It is found in income distribution and the hoarding of wealth, land and natural resources. Monopoly power is destroying money supply and velocity. Their solution to this problem is issuing more Debt!
Now they are doing "Non QE4"
So... get the government and its central bank out of our economy, our personal lives, and our foreign affairs. Their diagnosis is good. Their solution is poison.
This is what has happened online since QE started
(a rookie idiot's view)
Has anybody else noticed the hate that the American public has toward the FED? Has anybody noticed the hate that the American public has for the establishment? Is this the same in other countries? I guess so since Britain wanted to exit the EU to get away from the ECB! I believe that people should be congratulating the FED for recovering the struggling economy. The people of America realize just because the stock market and housing is at an all time high, that doesn't give them a better job and more extra money, because in order to fix the economy the FED had to inflate, so the prices followed the inflation and haven't left any extra money for the average U.S. citizen. Some Americans are happy their property values are high, but with the latest number stating that the public/private home ownership percentage rate came in at the lowest number in some time, this leads to the average consumer renting and broke, while the corporations and 1% owned during the largest upswing in recent history. The 99% public thought they were being smart when they didn't want to buy stocks and housing because they still were scared because of what happened in the Great Recession. Now, all they have left is hate and animosity toward the FED because they were swindled and it cost them their savings, which they are no longer allowed to build interest upon, due to low rates. The establishment and politicians swindle the public by speaking of problems that do not matter as greatly as the debt and the FED! Ron Paul spoke against the FED and nobody liked him, yet everybody online hates the FED. Maybe, it is just online where people hate the FED so much, but I just saw the book shelf and FED hate is a top seller these days. My personal philosophy is that the markets will continue to inflate and go upward until people stop revolting and hating the FED and the establishment. This is because the 1% are buying while there is "blood in the streets." This was especially apparent during the terror attacks and the police shootings. While the 99% were running around the streets, the 1% were pushing the market into a huge BULL RUN! Another thing that is astonishing is the number of doomsday crash predicting blogs and videos online. I have done research and concluded that for every 200 crash and doomsday market prediction sites, there is 1 Bullish positive global financial video or blog combined. It is a 200-1 ratio of bears over bulls! The 200 hate the FED, the 1 love them! It has been the media leading the masses of sheep to stay bearish since 2008. The crazy thing is that my entire research is online and available to back track to see the results. Have you ever listened to the radio or the local news when the DOW drops 300 points. It is a red light special BOMB alarm at the news. Meanwhile, when the DOW goes up 2000 points over the course of a month, only crickets. The funny thing is, I have been preaching this research all over the internet and instead of checking the stats, all anybody wants to do is argue with me and say that I am wrong. All one has to do is Google the words, stock market crash vs stock market melt up spike to see the ratio, and that's if they don't want to delve into the hard research. That only takes 1 second. Some say I might have a strange but easy investment strategy, it is mostly because that financial data is no longer readable, due to the massive amount of stimulus. This is why financial analysts have been screaming recession over the last 7 years, even though the markets have gone upward. This is why, you have to change your strategy to something other than reading charts. I am sure that much of the stimulus money has gone toward food stamps, and welfare, but this helps in the immediate term, but after the inflation catches up, the 99% cannot keep pace. Politically, it seems that the "LAST on the list" debate topic among both the democrats and the republicans is debt and the FED! The people are mad, but when it comes to politics, other topics trump (no pun intended) economics. Why is this? Is this because main street doesn't understand economics? Or, is it because people do not have patience, and want what they want when they want it, without thinking of the outcome? The republican/democrat debate is the first reason that problems are not being solved in the U.S. But, then again, it is wrong to say we have problems in the U.S. while the stock market and housing is at all time highs! Every time I hear the republicans say that we have economic problems, I think we certainly don't have economic problems if the housing and stock market is at all time highs, but when the democrats say everything is fine, I disagree because of the debt and inflated numbers from stimulus. The craziness of all this is QE has been over with for quite some time now, and it went on for a while (supposedly infinity.) I think it all comes down to hate. The average Joe wishes they could create 10 trillion of digital wealth out of thin air and give it to whom ever they want with no results or risk. Americans are wondering what the result of all this spending will have, even though it has worked in the eyes of stock investors and real estate investors. The one thing I wonder for the future of the FED is "why isn't quitting all central bank stimulus an option?"
The Ignorance of a very large majority of the American public is psychological. It is simply easier to place blame and anger upon anything but yourself. Last I checked this is a Government of the people by the people for the people. Far too many people have the completely ignorant belief that Freedom is some kind of entitlement given to them by that same Government they claim they hate. In fact this Liberty is a Responsibility that has to be earned through diligence of educating ones self which in turn helps to make wise choices about Government, and in turn Liberty. I have little hope we will ever get back the Liberty we have straight handed to our Government so that they may tax (rob), secure (enslave), etc. I have a theory that the fear and lack of mental health, self awareness, proper education about the responsibility of freedom, and example of importance of our role in Government, all these need to be handed down from our family and community. Until we get rid of this ignorance in some kind of major way the self educated aware citizens will continue to watch as the ignorant majority complains.
Because The idiots in the Congress wont do it, which leaves us one option, remove everyone in Congress that is not willing to solve our Problem, which of Course is the Federal Reserve System
UN SCAMMABLE
Very good observation. Thanks for your analysis and best wishes for you.
2024 From QE to QT... Market's still hitting All Time Highs.
They did NOT think QE2 would help those on Main St., they only said it would accomplish that to con people into accepting another round of bank bailouts. Don't be so naive.
If you pump enormous amounts of money into an economy, and anything that does reach the lower economic echelons of society gets spent immediately on essentials and paying off debt, so that all the money trickles upwards, and you simultaneously pigheadedly refuse to increases taxes for those at the top, then all the money accumulates at the top. They then use that wealth to buy more assets, leaving the rest of the population further indebted to them, which reduces the amount of spending money they have available, leading to a downward economic spiral.
The solution to this is to tax the assets/wealth of the richest, enforce those taxations, buy back the assets that used to bring in revenue for the government but got privatized away for scraps so that you get control of those services and reduce your government and populations' indebtedness to the ultra rich over time, and pump all of that money towards the lower and middle classes so that it actually circulates through the economy.
His name is too close to Jeffrey Epstein’s
So the answer is the Fed needs to make it easier for the middle class to take on more cheap debt. Got it.
Jesus, how did these people get to be experts?
They are talking within the context of the current financial system, which relies heavily on consumption to survive. We all understand that unproductive debt is bad.
We don't make much anymore and we don't pay wages, and there's no interest on savings, so all that's left as a profit driver is debt.
How the hell would municipal bonds help small businesses? Our local governments are incredibly corrupt and inefficient. Large amounts of money would be stolen by politicians. Most of the money for infrastructure bills would go to large developers and construction firms. Workers would get only a fraction of that money. Large segments of the population do not work in the trades. Most people are not architects or civil and electrical engineers. Many people would not see any income from these projects and very little of that money would circulate throughout the larger economy. We live in a world where everything people need to live is owned by wealthy individuals and large corporations. The recapture and retention rate of money generated using this fiscal policy would be very high. Debt is debt, at some point real money is needed to repay that debt. Stimulating an economy with debt will always end badly, regardless of wether it goes to the top or bottom. When it goes to the top it causes massive asset bubbles and exacerbates inequality. Even if it were distributed to those who need it most it would still lead to a collapse from the ensuing inflation and massive unpaid debt obligations. The real problem is predation and corruption. It is inherent in the very structure of our economy itself. It is found in income distribution and the hoarding of wealth, land and natural resources. Monopoly power is destroying money supply and velocity. Their solution to this problem is issuing more Debt!
Go Ahead Cut Their Social Security
V0te L1bertarian 💯🔥🔥🔥 n00bs