Two Pins Threatening Multiple Asset Bubbles
The comments below are an edited and abridged synopsis of an article by Michael Lebowitz
“Powell Says Fed Policies ‘Absolutely’ Don’t Add To Inequality.” This headline is but one of countless times Fed Chairman Powell and his colleagues confidently said their policies do not result in wealth or income inequality. Their political stature and use of complex economic lingo give weight to their opinions in the media. Nevertheless, a deep examination of the Fed’s practices and their consequences has Lebowitz thinking otherwise.
The Fed’s contribution to wealth inequality is significant and grossly misunderstood. Lebowitz has written articles explaining why QE and low interest rates generally benefit the wealthy and harm the poor. This article backs up those prior arguments with quantitative muscle.
Timely for investors, he also draws some lines between wealth inequality and financial stability and their relationship to monetary policy. He thinks it is becoming increasingly possible that wealth inequality and the outsized effect inflation has on the poor could be the needle to pop many asset bubbles.