“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”

The Missing Middle Class

By Karen Petrou

When we started this blog in 2017, we began with a plea for the Federal Reserve to factor inequality into its monetary and regulatory policy equation.  We showed at the start, here, here and here, that the Fed’s focus only on averages and aggregates obscures sharp polarization at each end of the U.S. income and wealth distribution.  It is these polarizations, as we’ve repeatedly seen in blog posts that undermine the Fed’s ability to set the U.S. economy on a forward trajectory of shared prosperity and stable growth – i.e., to meet its dual mandate as Congress expressly defined it in the Humphrey-Hawkins Act of 1978.  The Fed is still resolutely crafting monetary policy with its eyes firmly averted from increasing inequality.  Continue reading “The Missing Middle Class”

Gross Domestic Product and U.S. Inequality

By Karen Petrou

On January 22, Rep. Carolyn Maloney (D-NY) and 18 senior House Democrats reintroduced legislation (now H.R. 707) requiring federal statisticians to provide an equality-focused insight into the gross domestic product (GDP) number all too often considered the arbiter of American prosperity.  Senate Minority Leader Schumer (D-NY) and Sen. Martin Heinrich (D-NM) introduced the same bill last year and are sure to do it again and, then to join Maloney in pressing for action.  This time, it will come quickly in the House and may well pass the Senate in this Congress.  Would it make an equality difference?  No, but at least we’d know more clearly how much trouble we’re in.
Continue reading “Gross Domestic Product and U.S. Inequality”

Public or Perish? The Future of Public Banking

By Karen Petrou and Drake Palmer

“Public” banks have been touted since before the U.S. Revolution as a remedy for a variety of common financial ailments, most recently as a cure for private banking’s presumed indifference to public purpose in order to protect personal profit.  The 21st-Century Equality Bank we previously outlined is one way to align a bank’s private interest with public purpose without public subsidy.  Is it enough or are public banks also required?  The public-bank scorecard documents several centuries of well-intentioned financial institutions brought down due to immunity from effective regulation and a lack of market discipline.  Given the renewed interest in public banks, will this time be different?  We doubt it.  Continue reading “Public or Perish? The Future of Public Banking”

Wondering Why Trump Loves Tariffs? Check Out Globalization’s Inequality Impact

By Karen Shaw Petrou

When the IMF was established at Bretton Woods in 1945, it was key to the post-war creation of a globalized international economic and financial system.  That was then.  Now, the Fund has released a ground-breaking paper finding that globalization not only does not boost growth in advanced economies, but also appears to worsen income inequality.  The paper does not go on to push for protectionism – blasphemy at the Fund and not borne out for trade in goods by the detailed findings of this study.  It does, though, show that the more globalized capital flows grow in concert with more imports, the harder it is for low-skilled workers to get ahead.  No wonder the Rust Belt’s as angry as it said it was in 2016. Continue reading “Wondering Why Trump Loves Tariffs? Check Out Globalization’s Inequality Impact”