Something is changing about the perception of the Fed’s free-money policies. While we’ve lambasted them for their nefarious effects on the real economy and the inequality they produce, Wall Street, the prime beneficiary, has been bombastically gung-ho about them. And the mainstream media have praised the Fed’s “bold action,” as it’s called, at every twist and turn.
But now even Wall Street is getting cold feet. The official warning shot came from Fed Chair Janet Yellen, who admitted suddenly that “the extent of and continuing increase in inequality in the United States greatly concern me.”
Then bankers chimed in. FICO, which produces the infamous credit score, found in its latest survey of North American bank risk managers that 62% of them thought “the wealth gap poses a growing risk to the financial system.”
With the economy so dependent on consumer spending, “it makes sense that the concentration of wealth would raise flags among bank risk managers,” explained Andrew Jennings, FICO chief analytics officer. “This concern was echoed on a global scale by Credit Suisse in a recent report that found many indicators of wealth inequality are reaching levels that could result in social or political instability.”
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