One of the big news items of the day is that during recent years the top 7% of the country increased its wealth by over 20% on average while the other 93% decreased its wealth by about 4%. President Obama is busy lamenting this news as more proof of income inequality which must be remedied. What Obama proposes is more of the same policies he has had in place for the last five years which led to this increasing inequality. If it did not work before, why should it work now?
The real problem here is that Obama seems oblivious to the reasons why the income inequality has been growing. Here are the actual facts:
1. The way that most Americans increase their income and wealth is by earning more at their place of employment. Increasing wealth for the middle income groups and the poor requires creating more jobs and obtaining higher wages/salaries for the folks with jobs. Obama has totally failed to follow policies that increase jobs or that push wages up. That is why the vast majority of the country has seen its net worth sag.
2. The wealthiest segment of society increases its wealth and income through both salaries and income from investments. For the last four years, the Federal Reserve has been pumping money into the economy at a breakneck speed. In 2013, for example, the Fed should add over one trillion dollars to the money supply. For the most part, this additional cash gets used to buy investment assets like stock, bonds, precious metals and hard assets. All this extra cash from the Federal Reserve has forced up the prices of stock so that the stock market indices have all hit new highs even though the economy is still limping along. It is the policies of the Fed which have made the wealthy even richer.
Although the Fed is nominally independent, you can be sure that the central bank would not keep pumping money into the economy through quantitative easing if Obama opposed that action. The truth, therefore, is that although he laments the increasing inequality of income, Obama is more responsible for that inequality than anyone else in America.
Sadly, most of the folks in the Democrat party are so enmeshed in their economic dogma that they do not see the actual results of their policies. If Obama is able to push through his policies for another three years, we will see fewer new jobs, less economic growth, and a greater reduction in the wealth of most of the country. While he talks about how he is trying to help the middle class, Obama is actually taking a course that will destroy that group. America needs to wake up to the truth.
The real problem here is that Obama seems oblivious to the reasons why the income inequality has been growing. Here are the actual facts:
1. The way that most Americans increase their income and wealth is by earning more at their place of employment. Increasing wealth for the middle income groups and the poor requires creating more jobs and obtaining higher wages/salaries for the folks with jobs. Obama has totally failed to follow policies that increase jobs or that push wages up. That is why the vast majority of the country has seen its net worth sag.
2. The wealthiest segment of society increases its wealth and income through both salaries and income from investments. For the last four years, the Federal Reserve has been pumping money into the economy at a breakneck speed. In 2013, for example, the Fed should add over one trillion dollars to the money supply. For the most part, this additional cash gets used to buy investment assets like stock, bonds, precious metals and hard assets. All this extra cash from the Federal Reserve has forced up the prices of stock so that the stock market indices have all hit new highs even though the economy is still limping along. It is the policies of the Fed which have made the wealthy even richer.
Although the Fed is nominally independent, you can be sure that the central bank would not keep pumping money into the economy through quantitative easing if Obama opposed that action. The truth, therefore, is that although he laments the increasing inequality of income, Obama is more responsible for that inequality than anyone else in America.
Sadly, most of the folks in the Democrat party are so enmeshed in their economic dogma that they do not see the actual results of their policies. If Obama is able to push through his policies for another three years, we will see fewer new jobs, less economic growth, and a greater reduction in the wealth of most of the country. While he talks about how he is trying to help the middle class, Obama is actually taking a course that will destroy that group. America needs to wake up to the truth.
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