In a commentary published today, I argue that Bernanke’s Fed policies are harming 90 percent of Americans while benefitting a wealthy few. Beyond punishing savers and rewarding borrowers, his policies are aggregating more wealth to individuals already holding significant amounts of it.
Bernanke has recently testified in front of both the House and Senate Budget Committees explaining his outlook on the economy and the Fed’s policies. No attention is given to the Fed’s role in affecting wealth disparity. It needs to be addressed.
From the Commentary:
“Bernanke’s current Fed policy is harming savers whose primary assets are their deposit accounts, homes and vehicles while benefitting those with substantial stock, bond and real estate holdings and business assets.
According to the most recent Federal Reserve Survey of Consumer Finances, 90 percent of all income earners held on average less than $10,000 in stocks and less than $25,000 in bonds. And they’re primarily dependent on their wages to support themselves and their families. The other 10 percent can augment their spending with income from sources other than wages like stocks, bonds and other productive assets. Those lacking a significant source of revenue apart from their job wages will not benefit from the Fed’s money printing and zero percent interest rates.
The reason is that as the economy returns to growth, prices of both goods and wages will rise but the former faster than the latter. And the stocks and productive assets of the top ten percent of income earners will have appreciated at such a pace that they control a larger percentage of wealth than prior to the Federal Reserve’s easy money policies. This is especially true and more pronounced under extremely low interest rates and high issuance of currency like at present and throughout the crisis.”