Interesting and excellent analysis. It is right on target.
However, I am not sure I share your apparent opinion that the wealth gap is a problem. If the Fed Funds rate were more normal (maybe 5%, which would still mean a 0% real rate) asset prices would be a lot lower and investors would be poorer. The wealth gap would be less, but would anybody be better off?
One consequence of the Fed's currency debasement and the federal government's reckless deficit spending is probably higher inflation. It seems like that is a more concrete and immediate economic problem - not wealth inequality.
I agree with your points. This piece is a response to the conversation about inequality and what the causes are. Fixing the wealth gap by making everyone poorer is a commonly applied solution, and no one ends up better off.
Yellen, Fed and SEC are working on a USD cryptocurrency, and also regulating other cryptocurrencies. Aside from the potential abilities of tracking and even limiting what I buy, this will allow for much more creative ways of manipulating the economy than just setting prime rates. Do you plan to address this in future comments?
Dennis, these are additional problems of privacy and government overreach, related to the Fed. For the moment, I am going to explore disparate outcomes and their roots. I will return to you question in the fall.
Watch this video
https://www.youtube.com/watch?v=NKfOekbax6A&t=124s
https://www.ft.com/content/57730688-aa49-4549-a127-4b2d625260a4
UBS concurs.
Doug Kass writes this morning that Treasury Secretary, Janet Yellen, is out to get Powell out of the Fed. Yep - it's political.
Interesting and excellent analysis. It is right on target.
However, I am not sure I share your apparent opinion that the wealth gap is a problem. If the Fed Funds rate were more normal (maybe 5%, which would still mean a 0% real rate) asset prices would be a lot lower and investors would be poorer. The wealth gap would be less, but would anybody be better off?
One consequence of the Fed's currency debasement and the federal government's reckless deficit spending is probably higher inflation. It seems like that is a more concrete and immediate economic problem - not wealth inequality.
John,
I agree with your points. This piece is a response to the conversation about inequality and what the causes are. Fixing the wealth gap by making everyone poorer is a commonly applied solution, and no one ends up better off.
Inflation is coming, unless demand crashes.
Yellen, Fed and SEC are working on a USD cryptocurrency, and also regulating other cryptocurrencies. Aside from the potential abilities of tracking and even limiting what I buy, this will allow for much more creative ways of manipulating the economy than just setting prime rates. Do you plan to address this in future comments?
Dennis, these are additional problems of privacy and government overreach, related to the Fed. For the moment, I am going to explore disparate outcomes and their roots. I will return to you question in the fall.
Thanks for your thoughtful input.