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How Central Banking Increased Inequality

posted by FatPhil on Tuesday August 22 2017, @01:23PM   
from the Philosophers-Stone dept.

An Anonymous Coward writes:

"Although today high levels of inequality in the United States remain a pressing concern for a large swath of the population, monetary policy and credit expansion are rarely mentioned as a likely source of rising wealth and income inequality. [...]

The rise in income inequality over the past 30 years has to a significant extent been the product of monetary policies fueling a series of asset price bubbles. Whenever the market booms, the share of income going to those at the very top increases.[...]

[F]inancial institutions benefit disproportionately from money creation, since they can purchase more goods, services, and assets for still relatively low prices. This conclusion is backed by numerous empirical illustrations. For instance, the financial sector contributed massively to the growth of billionaire's wealth"

Source: https://mises.org/library/how-central-banking-increased-inequality

I'll leave my comments as comments, but note that The Mises Institute is proudly, one might say almost by definition, Austrian School. Both the Institute and the School have had their fair share of criticism. Which of course doesn't mean that individual author is wrong on this particular matter. -- Ed.(FP)

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Original Submission

• Re:The obvious counterpoint (Score: 0) by Anonymous Coward on Tuesday August 22 2017, @08:10PM

  by Anonymous Coward on Tuesday August 22 2017, @08:10PM (#557697)

  An alternative explanation, which the Mises Institute and Austrian School vehemently deny, is that concentration of wealth and income is an inherent feature of capitalism.

  Socialism too and to a much more severe extent -- if we look to reality rather than ideology.

  Ergo, anyone who has capital to invest has a chance to grow their income without limits beyond how big their pile of cash is

  Interest rates are below both growth and inflation so the system is grinding to a halt. The final crash is so serious, because capital markets have a complete disconnect with tangible wealth.

  absent some sort of countervailing force (e.g. shortages of workers, unionization, government regulations) they will pay their workers no more than those workers need to survive,

  They pay market rate and do their best to reduce that market rate (H1Bs etc).

  thus limiting their ability to accumulate capital.

  Our ability to accumulate capital is hindered in a greater and relative sense by multinationals who are able to employ financial trickery to evade tax. To connect that back to central banking. Working people end up paying tax to cover the interest on money that is created as debt and there's simply no chance of paying all the interest because that money has not yet been created.

  Parent