Is this what a recovery looks like?
But consider that…
– And yet, the top ten American billionaires added $101 Billion to their collective portfolios last year. The top one percent of American households now owns 60% of financial assets, and since 2009 they have realized 95% of all income gains.
– In 2013, economic growth was sluggish, at best – a meager 1.9 percent. The unemployment rate fell, but that statistical mirage masked the fact that a record number of Americans simply left the labor force altogether.
– And yet, the Dow Jones index of 40 industrial stocks was up 26 percent in 2013, reaching 16,504. That’s 10,000 points higher than the Dow stood on March 9, 2009, in the immediate aftermath of the economic crisis of 2008. And the Standard & Poor’s index of 500 key stocks rose 29%.
What do these seemingly disparate items have in common? They were all made worse (or better, depending on your perspective) by something called quantitative easing – QE, for short – a Federal Reserve program that Stanley Druckenmiller, former chairman of the hedge fund Duquesne Capital, recently called it “the biggest redistribution of wealth from the middle class and the poor to the rich ever.” Fact is, QE may be simultaneously the most important and the least understood story of the past five years. What isn’t ambiguous is the impact QE has had on income and asset inequality in the United States.
The Federal Reserve System was established in 1913 after decades of economic boom and bust. Its purpose is to provide a kind of stable backbone for the economy, modulating the natural excesses of a free market system. It accomplishes this by controlling the money supply, which is critical for stable pricing and moderate interest rates, and by coordinating the activities of the banking sector, including working closely with the US Treasury Department and the central banks of other nations. The President appoints the Fed’s governors and chairman, but the Fed is not a part of the Executive Branch. Instead, the Fed acts as an independent institution under broad congressional oversight, including the banking committees of the Senate and the House, as well as the Government Accountability Office (GAO), the audit and investigative arm of the Congress.
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