So, who benefits from QE aside from the primary dealers themselves? Well, 52% of Americans own stock in some form, but the median value of that stock is surprisingly low. Remember, 60% of financial assets are owned by 1% of households. Any way you cut it, quantitative easing and the resulting asset bubble has been a tremendous boon for the wealthy because as Druckenmiller dryly notes, the wealthy have assets while the rest of us have debts. But it’s worse – not only have the wealthy seen the value of their existing holdings skyrocket; they have quite naturally used much of that profit to purchase everything from farmland and investment properties to gold and silver. And this has taken place during a period when the middle class has been divesting assets in order to survive a jobless recovery. The net result of quantitative easing has been a vast vacuuming up of middle class wealth by the richest households in the country.
As has been pointed out before, God doesn’t love the wealthy sinner any less than he loves the poor sinner. The Church exercises a preferential option for the poor not out of a greater love, but in pursuit of justice. In this case, we are concerned with distributive justice, which has to do with the fair allocation of goods in society. The Federal Reserve’s policy of quantitative easing, which may have begun with the best intentions, has clearly become a blunt instrument of distributive injustice that will lead to greater social, economic, and political instability. As Pope Emeritus Benedict XVI wrote in Caritas in Veritate:
Mark Gordon is a partner at PathTree, a consulting firm focused on organizational resilience and strategy. He also serves as president of both the Society of St. Vincent de Paul, Diocese of Providence, and a local homeless shelter and soup kitchen. Mark is the author of Forty Days, Forty Graces: Essays By a Grateful Pilgrim. He and his wife Camila have been married for 30 years and they have two adult children.