Populist anger is justified… low rates are a key driver of wealth inequality. 1. As interest rates approach zero, asset prices approach infinity (via "Discount

Populist anger is justified… low rates are a key driver of wealth inequality. 1. As interest rates approach zero, asset prices approach infinity (via "Discounted Cash Flow" valuation). The wealthy own most assets. 2. The wealthy tend to have a lot of debt (by choice). Low rates make this cheaper to deal with, and cheaper to obtain for speculation, lifestyle upgrades, etc. Point 1 above provides lots of equity to borrow against. This is the "wealth effect” which the Federal Reserve and other central banks have been deliberately pursuing. They thought reflating assets would make people feel better and spend more. Unfortunately the wealthy don't need ten haircuts a month or twenty meals a day. It also turns out that when normal people see houses becoming more expensive, they decide to save more. So the net effect has been negative. All very predictable but central banking is pre-scientific.