WHO WE ARE GET INVOLVED CANDIDATE SURVEYS C4L FOUNDATION ON THE ISSUES ABOUT AUDIT THE FED

Leftists economists admit Fed causes income inequality

Economists Gerald Epstein and Juan Antonio Montecino have produced two papers for "The Institute for New Economic Thinking"-- "Have Large Scale Asset Purchases Increased Bank Profits?" and the forthcoming, " The Impact of 'Quantitative Easing' on Expected Profits: Explaining the Rise and Fall of the Fed's QE Policy"-- both of which conclude that the Federal Reserve's Quantitative Easing contributed to income inequality.

This may not be news to readers of this blog but what makes it newsworthy is that "The Institute for New Economic Thinking" is hardly a hot-bed of Austrian free-market thinking. In fact, from my examination of their web site, it seems that this Institute has about as much to do with new economic thinking as the PATRIOT Act has to do with patriotism. Instead, this Institute, which counts George Soros as a founding partner, seems like an attempt to pour the same old Keynesian wine into new bottles.

Soros is certainly not known as a critic of fiat currency so it is noteworthy that an institute that he founded and funded is producing work critical of the Fed, even if the economics do not grasp the insights of Austrian Economics or the benefits of Ending the Fed.

Even worse, than their misunderstanding of our agenda is their solution to the problem of Fed-created economic income inequality as shown by this excerpt from Gerald Epstein’s interview in the Huffington Post:

LP: Many libertarians want to audit the Fed or just plain end it, while conservatives like Rick Perry label the Fed's actions treasonous. On the other side of the political spectrum, members of the Occupy Movement and progressives like Bernie Sanders and Elizabeth Warren challenge the Fed's ties to Wall Street. How do people with such vastly different ideologies end up distrusting the Fed?
GE: On the surface, it may look like the right wing and progressive criticism of the Fed is similar, but there are key differences. Many of those on the right distrust the Fed and want to eliminate its power in the belief that the private economy, including the private banks, will be much more efficient, productive and even democratic if they are left to themselves: in other words, the criticism of the Fed really reflects a desire to cripple the government in the service of increasing the power and authority of the market. The perspective of most progressive critics is quite different: they don't want to destroy the power of the Fed to regulate the macroeconomy and finance. They want to regain control over it so that it better serves the interests of the whole population.
So the right wants to destroy the power of the Fed to increase the power of finance; and the progressives want to reorient the Fed so that it will stop protecting the interests of finance and protect the interests of the broader population instead.

Sigh.......Auditing and then Ending the Fed would reduce the power of the big banks and Wall Street special interests. If that were not the cause then why are they opposing our efforts? Also, does it never occur to them that the special interests would still be able to exercise disproportion influence on monetary policy if it where "democratized?"

 At least they understand that we do not want to "democratize" monetary policy, unlike those Fed apologists who accuse us of wanting to put Congress in charge of setting interests rates.

 Here are some more excerpts from the interview:

LP: How have the Fed's actions impacted economic inequality in the U.S.?
Our papers suggest that initially, QE contributed to a pretty significant increase in inequality. It raised asset prices, which are owned primarily by the wealthy, while having relatively small if any positive impacts on bank lending, employment, wages or economic growth, so ordinary people haven't had much help. By the third round of QE in 2012-2014, the effects had likely muted quite a bit. There were probably not big impacts on asset prices from QE and the positive effects on employment growth might have strengthened somewhat.
But in the big picture, I think the evidence points to the conclusion that QE and other aspects of Fed policy increased inequality pretty significantly. This is reinforced if you take into account all the other non-standard measures the Fed used to bail-out the banks early on in the crisis. (empahis addeeded)
LP: Lately we hear a lot of worry about what will happen if the Fed raises interest rates. How might the average person feel it if this happens?
GE: Here's the interesting thing: the fact that QE and lowering interest rates almost to zero has worsened inequality, does not mean that raising interest rates will help reduce inequality. Economists have long known — and recent work by IMF economists supports this — that increases in interest rates normally worsen inequality, at least partly by reducing employment and wage growth.
So raising interest rates might lead to some initial reductions in wealth by lowering asset prices, but it could also take a bite out of your paycheck and dampen your prospects of finding a job. It's a bit of damned if you do and damned if you don't.
Help Campaign for Liberty take the first step toward ending the monetary policy that is a THE major cause of income inequality by supporting our efforts to Audit the Fed.

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