Don't blame the Fed for widening inequality. Blame Congress

[FreakinDJ]

Don't blame the Fed for widening inequality. Blame Congress


Yes, income inequality is a major problem, one that was worsened by the Great Recession and the sluggish recovery


And yes, the Fed's response to the crisis -- unprecedented amounts of easy money -- did boost the stock market. That, in turn, made many rich Americans even better off.

But those arguing that the Fed intensified inequality miss the boat: The Fed was the only game in town in 2008 because Congress didn't act more forcefully to save the U.S. economy. And if the Fed didn't step up to the plate, income inequality would likely be far worse today.

"Given the fiscal policy we had, what could the Fed do? I think they did the best thing they could," said Dean Baker, co-head of the left-leaning Center for Economic Policy and Research. "We wouldn't be happier with fewer jobs and a lower stock market."

http://money.cnn.com/2015/06/02/news/economy/income-inequality-federal-reserve/

[Igel]

1. Dangerous topic.

Early, before collapse of the system and the fiscal panic, would have been good. The problem was that a marginally (D) controlled Congress refused to cooperate with the minority party and the president to pass a bill. Larger bill were proposed when the recession began, but they were all struck down. It was only when there was a (D) Congress with a (D) president that there was enough trust to pass a larger stimulus. The little stimulus was, at the time, considered a short-term stopgap measure whose effect would peter out in August or September.

When did the crisis strike? A month or so after the predicted end of the stimulative effect of the mini-stimulus.

The larger stimulus, oddly enough, most insist on calling the Obama stimulus but making it part of the Bush II budget. Claim the credit, dodge the blame.

Many also act like the Obama stimulus was the only stimulus and refer to it as "the" stimulus. It was the second. Obama didn't want a large first stimulus. At the time, he was promising a balanced budget in his first term, and panning Bush II for the size of the deficit. Once he was in charge of the budget, $400 billion, larger than the one he panned, was a manageable deficit for the indefinite future.

Congress Years Total Dems Reps Others Vacant Total Dems Reps Others Vacant
110th 2007–2009 100 49 49 2 — 435 233 198 —

[FreakinDJ]

2. If we Tax the Wealth appropriately

We most likely would not have all this Disaster Capitolizm taking place and wouldn't be arguing Stimulis Bills when are discussing Income Inequality