Invested in Inequality

Writing in the Providence Journal, John Kostrzewa notes that Federal Reserve Chairwoman Janet Yellen has an expanded view of her organization’s concerns:

…Yellen has another, perhaps more immediate concern that is holding back growth: economic inequality.

In a recent speech to the Corporation for Enterprise Development, she said: “We have come far from the worst moments of the crisis, and the economy continues to improve. But the effects of the recession are still being felt by many families, particularly those that had very little in savings and other assets beforehand .”

That declaration seems… well… convenient, considering that the current economic “recovery” engineered by the policies of Yellen’s organization and the current administration of the federal government has benefited exclusively the top 10% of income earners (roughly above $120,136 per year) and mostly the top 1% (starting just shy of $400,000).

Indeed, the whole dance takes on a bit of a sinister tone when you consider a recent story that’s gotten a shockingly small amount of play:

It’s an extraordinary document. There is not space here to do it justice, but the gist is this: The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems.

Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.

I’d propose that it isn’t coincidental that the growth of big, nanny-state, central-planning government has coincided with a phasing out of average Americans’ benefit from economic expansion.  Most of that expansion, after all, has been fueled by government debt, increasingly relying on investment schemes to translate into the economy.  With the Obama Era, we saw the final switch flipped in ensuring that the losses of those schemes would be totally socialized, so that the investment class never lose in the deal.

The loop has closed, in other words, between the non-producing rich and the smooth-talking progressive politicians.  The next step (perhaps that to which Yellen is alluding) is for the money handlers to increase the use of government to spread more of that unused wealth directly to constituencies so that they’ll be less tempted to overthrow the whole regime.

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