The Data Shows The Fed Is Behind The Surging Wealth Gap

The data shows the Fed is behind the surging wealth gap. Such is despite protestations “Quantitative Easing” and “Zero Interest Rate Policy” do not affect the financial markets. Such was noted previously by Minneapolis Fed President Neel Kashkari:

“QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short-term risk-free instrument (reserves) for another short-term risk-free instrument (t-bills) leads to equity repricing. I don’t see it.”

While he may be “technically correct,” there is ample evidence of a direct impact on financial markets. As discussed in “Past Performance Is A Guarantee:”

“Given the high correlation between the financial markets and the Federal Reserve interventions, there is credence to Minsky’s theory. With an R-Square of nearly 80%, the Fed is impacting financial markets.“

Data Fed Wealth Gap, The Data Shows The Fed Is Behind The Surging Wealth Gap

There is little question the Fed is behind surging asset prices. However, are they to blame for rising inequality and the “wealth gap?” Kenneth Rogoff suggested the Fed is not responsible. To wit:

“Recently, a steady stream of commentaries point central-bank policies as a major driver of inequality. The logic is that hyper-low interest rates push up the prices of stocks, houses, fine art, yachts, and just about everything else. The well-off, and especially the ultra-rich, thus benefit disproportionately.

This argument may seem compelling at first glance. But on deeper reflection, it does not hold up.”