Critics’ third complaint is that QE raises inequality. Asset purchases, naturally, raise asset prices. Since the rich own most financial assets, QE tends to increase inequality through the “portfolio” channel. Yet to the extent that QE boosts growth, it reduces inequality, for joblessness is regressive: poorer workers suffer higher unemployment rates and more significant loss of income in weak economies. Higher inflation also makes debts easier to bear, because they can be repaid with money that is worth less. Since borrowers tend to be poorer than creditors, QE diminishes inequality in that way too. Recent research suggests that tight monetary policy tends to raise inequality while expansionary policy reduces it. m.youtube/watch?v=ZQbva_JoSCk economist/news/finance-and-economics/21629215-ending-quantitative-easing-may-be-penny-wise-pound-foolish-early-retirement
Posted on: Sat, 08 Nov 2014 21:32:34 +0000