Yes, it’s true: it is the policy of the Obama-era Fed to make the 1 percent richer. At Bloomberg, Matthew Klein has a piece analyzing the recent testimony of Janet Yellen in front of the Senate Banking Committee. He comes to the conclusion that many of the Fed’s policies have the rich as their most direct beneficiary:
Toward the middle of the hearing, Yellen said the Fed’s asset purchases and commitment to keep short-term interest rates low boosts share prices, but also noted that many Americans benefited from falling mortgage interest rates and the parallel increases in house prices. But the biggest direct beneficiaries of lower mortgage rates were the well-to-do, who were best positioned to refinance. Although it’s certainly good that many borrowers have been lifted above water on their mortgages thanks to rising house prices, there are good reasons to be skeptical that this will generate much additional spending.The tens of millions of Americans who own neither shares nor their own homes may have benefited indirectly as relatively wealthy people got even wealthier, but that’s not much different than saying lower taxes on the rich improve the well-being of the poor.
This type of thing is an all-too common feature of blue politics. Despite the egalitarian and ‘social-justice’ impulses of the naive blue liberals at the grassroots, a decaying blue social model inevitably creates more inequality and privilege. Well-connected insiders get sweetheart deals from government, for example, and insurance lobbyists get to wield a veto power over Obamacare’s re-structuring of the American health care system. Most of the so-called green policies we’ve seen are basically ways to channel money from ordinary consumers to political insiders who invest in clever enterprises engineered to suck in subsidies or to thrive in protected, artificial markets created by regulations. Now Obama’s pick for Fed chief wants to add juice the economy by boosting the savings of the rich.We don’t think the Fed is the villain here; given the economic circumstances it is working in, it may not have had a lot of choice to pursue different strategies. But the larger issue this piece brings to the fore is about the blue coalition more generally. While the populist rhetoric of modern blue politicians is all about redistribution and inequality, the reality is that blue policies entrench privilege.[Money image courtesy of Shutterstock]