Even Stiglitz Confirms It——Fed’s Zero-Rate Policy Boosts Inequality

David Stockman reports:

The Federal Reserve’s prolonged policies of near-zero interest rates and asset purchases have further widened the already large gap between the rich and poor in the United States, says Nobel prize-winning economist and Columbia University professor Joseph Stiglitz.

“Contrary to the presumption in the nineteenth century, where lower interest rates favored debtors over creditors and thus increased equality, we show that…lower interest rates may actually increase inequality,” Mr. Stiglitz, a long-time inequality scholar, argues in the fourth of a four-part working paper series published by the National Bureau of Economic Research.

That’s because rich individuals tend to hold much of their wealth in a stock market thatbenefits disproportionately from such policies, which included purchases of government and mortgage bonds, a program known as quantitative easing or QE.

“The composition of wealth-holdings will differ between the capitalists and life cycle savers, so that any policy which differentially benefits those assets held by capitalists leads to greater inequality. Quantitative easing did that,” he says.

Even statist economist Joe Stiglitz can't deny artificially low interest rates boost inequality.