Here’s How Hillary Clinton Will Increase Income Inequality

income inequality

In case you missed the memo, Hillary Clinton has a middle class problem. Time and time again, she has missed the mark on a number of key issues that matter to average Americans — among them: bank bailouts, crony trade deals, and blue collar tax hikes.

income inequality

But in a press conference last Tuesday, Mrs. Clinton finally hit the head of the Whac-a-Mole. When asked about Donald Trump’s recent critiques of the Federal Reserve, she rebuked: “He should not be trying to talk up or talk down the economy, and he should not be adding the Fed to his long list of institutions and individuals that he is maligning and otherwise attacking.”

With this comment, Mrs. Clinton slapped every middle and low-income American right in the face. The Federal Reserve’s easy-money policies shuffle money from average Americans to big banks and businesses — more so than any other government-implemented policy does.

Both Republicans and Democrats have acknowledged that the Fed’s reckless policies have made the rich richer and the poor poorer, and yet Mrs. Clinton is unwilling to even entertain any serious criticisms of the central bank?

Perhaps this is due to the $20 million-plus in campaign contributions she’s received from financial services firms that depend on the Fed’s extortion of funds from the middle class. Or perhaps it’s a result of the fact that over the course of the presidential primary season, Mrs. Clinton received over four times more in donations from Federal Reserve officials than every other Republican and Democratic candidate combined.

Regardless of the reason, let us continue Donald Trump’s discussion of how the Fed has exacerbated income inequality anyway, because it’s a problem that is greatly affecting the lives of most people in this country.

Former Federal Reserve Governor Kevin Warsh refers to the Fed’s easy-money policies as the reverse Robin Hood effect. “If you have access to credit—if you’ve got a big balance sheet—the Fed has made you richer,” he said in an interview. “This is a way to make the well-to-do even more well-to-do, because that’s all the Federal Reserve can do.”

How exactly does the Fed take this money from average Americans and put it into the hands of big business interests? Simple: the Fed holds a monopoly over our country’s money supply. It can create new dollars whenever it wants and dole them out to whomever it pleases. And guess what? It chooses the bigwigs with the suits and briefcases over blue collar families every single time.

It’s common knowledge that an increase of supply tends to result in a decrease of value. Dollar bills are of no exception to this axiom. When the Federal Reserve increases the money supply, the dollar becomes worth less. In fact, since the Fed’s creation in 1913, the dollar’s purchasing power has declined by 95 percent. That means what you can buy for $1 today only cost 5 cents in 1913.

But remember: corporate interests are getting this newly-created money first! They are the ones responsible for the price increases — they receive gigantic loans from the Fed and spend the money like there is no tomorrow. The resulting surge in demand jacks up the prices of goods before the rest of us can even get in our cars to purchase them.

We saw this in the years prior to the Great Recession of 2008. The Fed’s easy-money policies led to egregious overinvestment and overproduction in the housing industry. As a result, the prices of capital goods like bricks and steel skyrocketed, while the cost of homes shot up an average of 175 percent. Prices got so high that our economy could no longer function — the housing bubble popped, causing global financial distress and the loss of 8.7 million U.S. jobs.

The Federal Reserve’s expansion of the money supply might have worked out great for the builders who were able to produce houses before the collapse of the industry. It might have even worked out well for the few investors that were smart enough to leave the market at the right time. But one thing’s for certain: it didn’t work well for the rest of the country.

But even after the collapse of the housing market, the Fed continued with its expansionist policies. From 2009 to 2012, the money supply increased by over 2 trillion. This allowed the real incomes of the top 1 percent to jump by more than 30 percent. But, of course, much of this increase came at the expense of blue collar Americans. As the privileged few received this money from the Fed and bid up the prices of goods, the wallets and purses of us “little people” grew thinner and thinner.

Over just this 4-year period, the price of bread increased by nearly 12 percent, while the price of a 12-pack of water skyrocket by 41 percent. The cost of potatoes and bacon also appreciated, by 31 percent and 51 percent respectively. Due in part to these Fed-induced price increases, average Americans saw virtually no real income gains over this time period, all while the super-rich continued to get richer.

But, as former Fed governor Kevin Warsh explained, that’s the nature of the Fed’s reverse-Robin Hood game — the central bank takes purchasing power from us in order to please the privileged few.

Hillary Clinton is wrong — the Federal Reserve is the middle class’s worst enemy. It’s literally taking our money and giving it to special interests, and more politicians should follow Donald Trump’s lead of “maligning” and “attacking” the institution. The time is now for Mrs. Clinton to take off her rose-colored glasses, join with her populist supporters, and begin examining the world from the lenses of the middle class. The American people are tired of the same old policies, which have exacerbated income inequality and stagnated the economy. It’s time for change.

 

source : huffingtonpost