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>The Fed explicitly justifies QE and the rest of their monetary insanity on the basis of the “wealth effect”. They do?? Do you have a source for this?
by Simon321 5y ago
>The Fed explicitly justifies QE and the rest of their monetary insanity on the basis of the “wealth effect”.
They do?? Do you have a source for this?
- esja 5y agoThey’ve said this publicly many, many times. It’s quite incredible that the Left have not made the connection between the Fed openly aiming to increase wealth inequality (which is what this is) while also keeping a watchful eye out for any wage inflation (which is the only way the common person can keep up). https://digitalcommons.trinity.edu/econ_faculty/31/ https://digitalcommons.trinity.edu/econ_faculty/31/ Search for Bernanke wealth effect or any variation you like. The BIS and other central banks talk about it openly as well. The central banks are the biggest engines of wealth inequality in the world, and it’s all done in the open with barely any pushback.
- q1w2 5y agoNot really. They used this term in the housing crisis, in reference to stabilizing home prices. They recognized that home equity loans were driving a lot of spending AT THAT TIME. It's not some general core principle. Also, the stimulus checks are also a "wealth effect" mechanism, but no one would confuse that for "trickle down". The title makes a false comparison.
- esja 5y agoThat’s not the case. All the central banks and the BIS understand and use this terminology when discussing the relationship of asset prices to demand, and it’s not at all specific to the USA or even a specific time period or specific market in the USA. Also, the stimulus checks are a fiscal measure and have absolutely nothing to do with the wealth effect induced by loose monetary policy.