Enough Tooth Fairy Fiction------Yes, The Fed Is Fueling Income Inequality

One of my favorite charts for class is the US CPI Wage Earners Purchasing Power of Consumer Dollar chart since the Federal Reserve System was created in December 23, 1913. It fell from 3.344 to 0.144 today. That is a big loss in wage earner purchasing power.


Has The Federal Reserve System helped do away with income inequality? Er … no.

If fact, the GINI coefficient (a measure of statistical dispersion intended to represent the income distribution of a nation’s residents) has been growing since 1969 as wage earner purchasing power falls.


And income equality has grown since The Fed instituted Fed Funds Target rate cuts in 2007-2008 and quantitative easing in 2008 and beyond.


Of course, there are other confounding reasons for the rise in income inequality. But notice that income inequality has risen steadily regardless of which political party is controlling Congress or the Administration.

So, let’s stop believing in the tooth fairy, the Easter bunny and Sasquatch and just recognize that The Federal Reserves contributes to income (and wealth) inequality rather than level the playing field.

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