Marginal Propensity to Consume Archives

By Karen Petrou

In a dangerous double-whammy, monetary policy not only makes America even less economically equal, but economic inequality also frustrates monetary-policy transmission.
Thus, recessions are deeper and longer, reversing the good-times income gains central banks take as proof that their policies are not dis-equalizing even as the wealth divide grows ever wider.
Because monetary policy when rightly judged in terms of both income and wealth adversely affects economic equality and inequality stymies monetary policy, we won’t have macroeconomic-effective monetary policy until we have equality-focused monetary policy.

By Karen Shaw Petrou

Although the Federal Reserve resolutely rebuffs suggestions – mine included – that it’s exacerbated U.S. economic inequality, the Bank of England has been forced by public outcry to deal directly with its own inequality impact. Reacting to strong public protest and withering fire from the Prime Minister, the BoE recently released not only a report denying the charges itself, but now also an exculpatory speech by Andrew Haldane, its influential chief economist. Clearly feeling the heat, the Bank of England has even come up with a way to sell its positive message: personalized “scorecards” proving to the skeptical citizenry that it’s better off than personal economic problems might lead it to believe. Continue reading “Baseball Cards for the Equality Game?” →

Tag: Marginal Propensity to Consume

How Inequality Stymies Monetary Policy and What to Do About It

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Baseball Cards for the Equality Game?

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