By Karen Petrou
- African-Americans were better off before the civil-rights era began than they were in mid-2019.
- Truly huge disparities lie between white and black Americans in terms of income, wealth, and inter-generational mobility.
- And that was before COVID eviscerated low-income households of color from both a health and economic point of view.
- It’s past time for equality-focused financial policy, starting first with Equality Banks.
Continue reading “Trying to Get By While Black”
By Karen Petrou
As the COVID crisis continues, some have speculated that wealth inequality will drop because it did in the 1400s during the Black Death. However, this cure is not only of course considerably worse than the disease, but it’s also no cure. Economic inequality is a cumulative process – the worse off you are, the worse off you get unless something positive reverses this compound effect. Conversely, the better off, the still more comfortable unless something comes along to redistribute your gains, however well or ill gotten. Given how unequal the U.S. was before COVID, it will surely get only more so now, especially if the Fed stays the course with trillions for financial markets and pennies for everyone else. Continue reading “Inequality Rising”
By Karen Petrou
Starting with our very first EconomicEquality blog post, we demonstrated the direct link between quantitative easing (QE) and the sharp rise in U.S. wealth inequality that differentiates this recovery from all that came before. QE exacerbates inequality because, combined with post-crisis rules and ultra-low rates, it creates a market dynamic in which banks hold huge excess-reserve balances instead of making equality-essential loans and markets relentlessly chase yield, increasing equity valuations and driving credit to borrowers such as highly-leveraged companies. In 2019, the Fed bulked up its portfolio in what is now known as QE-lite in hopes of rescuing the repo market, reinvigorating sputtering equity markets no matter the Fed’s ongoing insistence that this round of portfolio increases isn’t QE. Continue reading “Wheelies on the Yield Curve: Inequality, Disintermediation and the Hazards of New QE”
By Karen Petrou and Matthew Shaw
Shortly before Thanksgiving, a new study documented that U.S. life expectancy since 2010 has taken a sharp turn for the worse for younger Americans regardless of race, gender, or education. We knew that opioids were devastating, but this study confirmed others showing also that the overall reversal in U.S. life expectancy is due to more profound and mysterious afflictions. Doctors are flummoxed by why U.S. mortality is so much higher than that in other advanced countries, where life expectancy continues to increase for younger citizens, concluding that something endemic is going on behind the epidemic of “diseases of despair.” The latest inequality data demonstrate yet again that the economic “good place” that comforts Fed policy-makers is to be found only in the 100th floor penthouses that are the eyries of the one percent. We thought the data more than dispiriting when we analyzed the Fed’s first distributional financial account; now, we find them devastating, not to mention evil omens of a polarized, angry electorate heading to the 2020 polls. Continue reading “Dark Corners in “Good Places””