A Tiny Taper, In 2 Graphs – “In the past five years, the Federal Reserve has created roughly $3 trillion out of thin air. The Fed uses the money it creates out of thin air to buy bonds. The idea is to drive down interest rates, which encourages people and businesses to borrow and spend money. It’s called quantitative easing. The big news today is that the Fed will soon start creating slightly less money out of thin air every month. Starting in Januray, the central bank will go from creating $85 billion every month to creating $75 billion a month. In the context of the roughly $3 trillion the Fed has already created, this change is vanishingly small.
Spying Run Amok - “Whatever we think of Snowden — self-aggrandizing creep or self-sacrificing crusader against creepy government spying or sociopath with stolen documents, as The Wall Street Journal put it, or someone who should ‘swing from a tall oak tree,’ as John Bolton told Fox News — it is absolutely clear that the N.S.A. went wild with technology that allowed it to go wild. These technological toys turn everyone into thieves.”
In fact, given relatively high average rates of return on capital and thus a large gap vis-a-vis the growth rate, wealth concentration is likely to reach and then surpass peak levels seen in previous history as the superrich become those who started wealthy and benefitted from compound interest and luck.
America remains an exceptional puzzle: it looks, however, like it is headed for an even more extreme distribution of wealth than is the Old World.
Remember, however: the evolution of income and wealth distributions is always political, chaotic, unpredictable–and nation-specific: not global market conditions but national identities rule wealth distributions.
High wealth inequality is not due to any “market failure”: this is a market success: the more frictionless and distortion-free are capital markets, the higher will wealth inequality become.
The ideal solution? Progressive global-scale wealth taxes.