By Karen Petrou
- Although a new BIS report finally takes seriously the proposition that central banks may inadvertently increase economic inequality, it goes on to dismiss it because any inequality impact is said to be short-lived thanks to fiscal policy.
- However, neither short-lived inequality nor effective fiscal clean-up is substantiated by data in the U.S.
- But, while the BIS at least acknowledges some inequality impact, the Federal Reserve is obdurate that it doesn’t make economic inequality even a little bit worse. This means prolonged policy with still more profound anti-equality impact.
It is the purpose of this blog and my new book to show not just that monetary and regulatory policy may increase economic inequality, but also that the Fed’s policies since at least 2010 in fact did so. This isn’t an academic exercise – it’s an effort to show as analytically as possible how monetary policy exacerbates inequality so monetary policy alters course before inequality’s systemic, political, and human cost grow still higher. However, disciplined analytics that power up effective advocacy must be open to correction. This blog post thus looks first at a new, if halting, acknowledgement of at least some inequality impact from the Bank for International Settlements and then the Fed’s still-stout denial that it has any responsibility for the growing U.S. wealth and income divide.
Continue reading “The Central-Bank Inequality Excuse and Why It’s No Exoneration”
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
- Pre-COVID inequality evidenced itself instantly in post-COVID consumer-finance extremis.
- A unique construct of ground-up recovery policies is an essential, urgent response.
- Regulatory revisions would help and long-overdue equitable liquidity facilities would do still more.
- New public guarantees are critical.
Ever since the U.S. economy crept out of recession, the Fed has represented its slow, inequitable recovery as a “good place.” Its own 2018 economic well-being survey contradicted this and the latest data released on May 14 are no better before COVID came and a lot worse thereafter. These data make it still more clear that the Fed must quickly reorient its trickle-down rescues to move money starting at ground level, but even that won’t be sufficient given the magnitude of COVID’s economic impact. The combination of macroeconomic harm and financial-system hurt also requires a reset in which new public guarantees for prudent private financing fully recognized by new rules play a major part. Continue reading “Bad Things about the Good Place and How to Pretty It Back Up”