“People’s QE” and Noblesse Oblige

By Karen Petrou

As the chimera of the post-crisis recovery fades and central bankers find themselves powerless to reverse recession, “people’s quantitative easing” is gaining attention as a tool a growing number of central bankers fancy gives them a new way to wreak their beneficent will.  People’s QE – also known more colorfully as “helicopter money” – means that, despairing of fiscal-policy remedies, central banks print money and then either just give it to the people or invest it in assets they or their bosses think best for equalizing, trade-deficit dropping, climate-restoring, or other all-to-the-good economic growth.  However, it’s not just central bankers casting longing eyes at the ability of central banks to print money – officials ranging from those in the Trump Administration to the Democratic Socialist candidate for President see it as a new way to do what they think are the voter’s bidding without raising the deficit.  This is really, really central banking, but for all its power, it’s very problematic.  QE so far has done little to spur sustained recovery and much to make the U.S. even more unequal.  There’s no reason to believe a people’s QE will be any better. Continue reading ““People’s QE” and Noblesse Oblige”

America’s Stalwart Savers Get the Sucker Punch

By Karen Petrou

Recently, I had an op-ed in the Financial Times arguing that negative rates make it even harder for moderate-income households to accumulate wealth.  The reason, I said, is simple:  when savings-deposit or similar rates are ultra-low or even negative in real terms, households that save get poorer and poorer both on their own and in comparison to wealthier households with more sophisticated financial-asset investments.  This might seem irrefutable, but the article generated hundreds of comments.  Many were positive but more than a few countered that lower-income households don’t have savings so savings rates don’t exacerbate economic inequality.  To my mind, this is like saying that poor people are already thin so the fact that they don’t have enough food doesn’t matter. Continue reading “America’s Stalwart Savers Get the Sucker Punch”

Cosmopolites, Financiers, Monopolists, and the 2020 Election

By Karen Petrou

…foreign competitors get to make the goods, and we just buy them.
And then they buy up American companies with the profits.  And
yes, in this bargain there are lots of jobs—jobs on Wall Street, or in
Hollywood, or in Silicon Valley…At the same time, it has encouraged
multinational corporations to move jobs and assets overseas to chase
the cheapest wages and pay the lowest taxes.  And it has rewarded
these same corporations for then turning around and investing their
profits not in American workers, not in American development, but in
financial instruments that benefit the cosmopolitan elite.  And where
has this left middle America?  With flat wages, with lost jobs, with
with declining investment and declining opportunity.  We don’t make
things here anymore—at least, not the kinds of things a normal person
without a fancy degree can build with his hands.
Continue reading “Cosmopolites, Financiers, Monopolists, and the 2020 Election”

2020’s Equality Policies 101

By Karen Petrou

On July 18, the Economic Policy Subcommittee of the U.S. Senate Banking Committee turned its attention from the panel’s usual agenda to an unusual hearing on the challenges posed by U.S. economic inequality and what Congress might actually do about them.  For the first time, we saw a shared belief by senators on both sides of the aisle and diverse witnesses that, over the past two decades, Americans have become mired in the income and wealth into which they are born.  This isn’t exactly a news flash – see our prior blog posts on how unequal America has become and our most recent one on the dearth of public resources with which to counter fierce economic downdrafts.  However, it isn’t just that senators finally discovered inequality – it’s that the outline of a bipartisan response took shape.  Thus, for all the difficulty in Congress doing anything about even something as critical as economic inequality, the session was a break-out moment. Continue reading “2020’s Equality Policies 101”

Public Wealth and Private Worth: The Inequality Impact of Deficit Spending

By Karen Petrou

Progressive Democrats have recently touted modern monetary theory – i.e., that deficits don’t matter – to press social-welfare spending.  Similarly dismissive of deficits, the Trump Administration and many Republicans now cotton to giant trickle-down individual tax cuts.  But, deficits do matter not just for fiscal hawks, but also for equality advocates.  A new IMF study takes an unprecedented look at U.S. public wealth since 1946, concluding that lots less public wealth undermines the ability of fiscal policy to alleviate economic downturns.  Continue reading “Public Wealth and Private Worth: The Inequality Impact of Deficit Spending”