Central banks creating inequality

2021.02.14 by The Last Hawk

Inequality is on the rise again following another period of massive central bank stimulus. Recent asset price inflation has effectively forced large parts of the low and middle class out of the housing market, whereas current homeowners are adding huge gains to their networth. The central bankers are reluctant to acknowledge any role in this and some even go as far as to deny that there is a link between the surge in asset prices and monetary policy. Instead the narrative they sell is that as long as they can reach a 2% average in the consumer price inflation then current policy is successful and the result will be good.

Politicians seem to accept all messages from the central banks as if they are undisputable scientific facts. Hardly ever will they publically criticize, question or even have an opinion about monetary policy. This leads to an environment where the central banks are allowed to experiment freely. And freely they have experimented while turning a blind eye on the devestating fallouts of their actions.

The consequences are becoming visible for everyone to see. Ballooning private and sovereign debt, destruction of free markets and a massive transfer of wealth from savers to borrowers. People on average salaries or below are forced into a modern day proletariat where their most important expenses are raising faster than their salaries and disposable income. Economic outlook is grim for an increasingly large part of the population.

Central banks have been an extremely useful tool for financing broke governments who no longer have had to balance their budgets. The costs are passed on to the proletariat and to people who store their wealth in fiat currencies. Oddly enough the rapidly increasing inequality hasn't yet caught the attention of politicians, and there hasn't been any meaningful fiscal response to mitigate the negative consequences of current monetary policy.

Ultimately the central banks should be held accountable for their role in creating inequality.