{"id":22645,"date":"2017-02-04T09:39:38","date_gmt":"2017-02-04T14:39:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22645"},"modified":"2017-02-04T09:39:38","modified_gmt":"2017-02-04T14:39:38","slug":"the-central-banks-face-unwelcome-realities-their-policies-boosted-wealth-inequality-and-failed-to-generate-growth","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22645","title":{"rendered":"The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality and Failed to Generate “Growth”"},"content":{"rendered":"

The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality and Failed to Generate “Growth”<\/a><\/h3>\n
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Rather than be seen to be further enriching the rich, I think central banks will start closing the “free money for financiers” spigots.<\/i><\/div>\n
Take a quick glance at these charts of the Federal Reserve balance sheet and bank credit in the U.S.<\/b>\u00a0Notice what happened to bank credit after the Fed “tapered” and stopped expanding its balance sheet?<\/div>\n
<\/div>\n
Bank credit exploded higher:<\/div>\n
<\/div>\n
Now look at corporate profits:<\/b><\/div>\n
<\/div>\n
Once the Fed ended its $3.7 trillion “experiment” of vastly expanding its money-creation and bond-buying in early 2014, what happened to bank credit?<\/b>\u00a0Bank credit had expanded by a bit over $1 trillion in the early years of the Fed’s quantitative easing, but it really took off after QE3 ended, soaring roughly $2 trillion.<\/div>\n<\/div>\n
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This was the policy goal all along:<\/b>\u00a0the Fed would do the heavy lifting to keep credit and the financial markets from imploding, and eventually private-sector credit would expand enough to fuel a self-sustaining recovery.<\/div>\n
While measures of employment and production have lofted higher, productivity, profits and wages for the bottom 95% have all stagnated.<\/b>\u00a0Is it coincidental than corporate profits began weakening once the Fed’s QE3 ended? Perhaps.<\/div>\n
How about the stagnation of household median income during the Fed’s expansion and the rise of private bank credit from 2014 to the present? Was that also a coincidence?<\/div>\n
If the economy was expanding smartly as the Fed was goosing credit higher, it certainly wasn’t trickling down to households.<\/div>\n
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<\/div>\n
What’s happening beneath the happy-happy surface is that the returns on expanding credit are diminishing rapidly.<\/b>\u00a0The Fed’s QE “free money for financiers” never did “trickle down” to the bottom 95%, and the enormous expansion of bank credit is no longer driving corporate profits higher.<\/div>\n<\/div>\n
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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Central Banks Face Unwelcome Realities: Their Policies Boosted Wealth Inequality and Failed to Generate “Growth” Rather than be seen to be further enriching the rich, I think central banks will start closing the “free money for financiers” spigots. Take a quick glance at these charts of the Federal Reserve balance sheet and bank credit […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,127,175,303,305,869],"class_list":["post-22645","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-charles-hugh-smith","tag-credit","tag-fed","tag-federal-reserve","tag-wealth-inequality"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22645"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22645\/revisions"}],"predecessor-version":[{"id":22646,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22645\/revisions\/22646"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}