Only the rich could love this economic recovery.
Things are finally looking up in much of America, as the worst of the pandemic seems to have crested. And if you're among the top 1 percent of income-earners, your economic situation has quite possibly never been better. |
That's because while the bottom 50 percent gained about $700 billion in wealth since the pandemic began — paying down debt and adding to their savings — the top 1 percent gained a staggering $10 trillion. |
 | | Source: Board of Governors of the Federal Reserve System | The New York Times |
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The reasons for this are manifold, but a big contributor was the economic stimulus program carried out by the Federal Reserve, which controls America's monetary policy. It made the rich even richer, in the false belief that those benefits would "trickle down" to everyone else. |
She argues that the Fed is creating astronomical amounts of wealth inequality with its well-meaning but flawed attempt to keep the economy humming along. |
The argument goes like this: In an effort to keep money flowing, the Fed pours billions into the economy — in a program called "quantitative easing" — and slashes interest rates to rock-bottom levels. It's the same strategy they used after the 2008 global financial crisis. And it worked in some places. |
The problem, she writes, is that the money passes mostly to the rich, who see incredible gains while lower-income Americans struggle. |
Consider the stock market. It's reaching new heights, but the people who benefit most are those who own a lot of stock. The Fed's policies also make mortgages cheaper, which is great only for those with the income and savings to qualify. A mix of cheap debt and pandemic-era demand for housing caused home prices to soar this year, enriching property owners but putting renters further behind. |
 | | Source: Board of Governors of the Federal Reserve System | The New York Times |
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What about people who try to get ahead by saving their hard-earned money in a simple savings account? With interest rates so low, $10,000 placed into a savings account in 2007 would be worth $9,529 today, after taking inflation into account — a flat-out loss. Compare that to an investor, who would have turned the same $10,000 into $23,250 after inflation. |
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