A week ago, the official truth about QE, once upon a time mischaracterized as being a means to boost US employment (which is misreported in such an optimistically biased way that even the Fed now admits is ridiculous, and had to scrap its forward guidance as a result) and grow the economy, emerged when the Fed’s Fisher admitted that “QE was a massive gift intended to boost wealth.”
Fisher did not need to clarify just who the gift was aimed at – it was clear. But just in case there is any confusion, here is a chart confirming that all the events of the past 5 years have done, courtesy of the Fed’s manipulation of the stock market to all time artificial highs, is to push the ratio of the average income of the “Top 10%” to the “Bottom 10%” to a previously unseen level, wildly surpassing the previous record inequality highs that culminated in the Great Depression, and which were subsequently rapidly “equalized” by WWII.
Still not convinced? Another way of showing this – the ratio of the net worth of the top 20% of households as measured by income relative to the bottom 20% rose to 9.3x in 2011 from 5.7x in 2005.
And another observation: when it comes to inequality between the top and the bottom, the US continues to be the most unequal country in the world, a distinction it first regained in the 1980s courtesy of Alan Greenspan’s “Great Moderation.” We point this out just in case there still is any confusion who the Fed truly works for…
Why? Thank the death of the US middle class, because that is precisely who Bernanke, and now Yellen, means to exterminate no matter the costs.