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Income and wealth inequality are near their highest levels in the past hundred years

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Helsworth
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Income and wealth inequality are near their highest levels in the past hundred years

Janet Yellen: Average Net Worth of 62 Million U.S. Households is $11,000
By Pam Martens and Russ Martens: October 20, 2014
Source: http://wallstreetonparade.com/2014/10/ja...-is-11000/

Janet Yellen, Federal Reserve Chair

It took 200 years of hard data in a bestselling book by Thomas Piketty, awesome graphs and charts in Robert Reich’s documentary, “Inequality for All,” and years of scolding from Wall Street on Parade, but Fed Chair Janet Yellen has finally, and correctly, arrived at the idea that the nation’s economic ills are deeply rooted in the fact that U.S. “income and wealth inequality are near their highest levels in the past hundred years.” That was the message Yellen delivered on Friday in a speech at the Federal Reserve Bank of Boston, replete with stomach-churning figures from the Fed.

Make no mistake about it, coming at the end of a week that saw dramatic up and down spikes in the stock market – Yellen was sending a pivotal message to the Wall Street wealth hoarders – your billionaire standing could be as ephemeral as a day lily if we don’t fix this income and wealth gap.



Yellen quieted the crowd with this opener: “The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression.” Using data from the Fed’s Survey of Consumer Finances, Yellen punctuated her message with these hair-raising figures:

“The wealthiest 5 percent of American households held 54 percent of all wealth reported in the 1989 survey. Their share rose to 61 percent in 2010 and reached 63 percent in 2013;

“The lower half of households by wealth, held just 3 percent of wealth in 1989 and only 1 percent in 2013. To put that in perspective…the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013.”

“This $11,000 average is 50 percent lower than the average wealth of the lower half of families in 1989, adjusted for inflation.”

A “major source of wealth for many families is financial assets, including stocks, bonds, mutual funds, and private pensions…the wealthiest 5 percent of households held nearly two-thirds of all such assets in 2013…”



Franklin D. Roosevelt, President During the Great Depression
Franklin D. Roosevelt, President During the Great Depression
Unfortunately, being the head of a Federal Reserve system that relies on goodwill with the big Wall Street firms to carry out its open market operations, Fed Chair Yellen apparently felt it would be impolitic to mention that this vast wealth inequality is coming from an institutionalized wealth transfer machine operated by Wall Street and supervised by a Fed that is regularly reviled for its wussiness when it comes to cracking down on blatant corruption by its charges.

What is particularly noteworthy is that Yellen specifically references the Great Depression but does not seem to comprehend where the slack in the U.S. economy is coming from. Franklin Delano Roosevelt, running for President in 1932, had no such difficulties.

In a speech at Oglethorpe University in Atlanta on May 22, 1932, in the midst of the Great Depression, Roosevelt made the following remarks:

“raw materials stand unused, factories stand idle, railroad traffic continues to dwindle, merchants sell less and less, while millions of able-bodied men and women, in dire need, are clamoring for the opportunity to work…

“our basic trouble was not an insufficiency of capital. It was an insufficient distribution of buying power coupled with an over-sufficient speculation in production. While wages rose in many of our industries, they did not as a whole rise proportionately to the reward to capital, and at the same time the purchasing power of other great groups of our population was permitted to shrink…

“Do what we may have to do to inject life into our ailing economic order, we cannot make it endure for long unless we can bring about a wiser, more equitable distribution of the national income…

“It is well within the inventive capacity of man, who has built up this great social and economic machine capable of satisfying the wants of all, to insure that all who are willing and able to work receive from it at least the necessities of life. In such a system, the reward for a day’s work will have to be greater, on the average, than it has been, and the reward to capital, especially capital which is speculative, will have to be less.”

Until Fed Chair Yellen is prepared to do more than give lip service to income and wealth inequality, her command over monetary policy will be sorely challenged.


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28.11.2014 19:27
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Rising Phoenix
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Post: #2
RE: Income and wealth inequality are near their highest levels in the past hundred years

Good post. But I would like to make a rather troll-ish remark:

Helsworth Wrote:
[...]Make no mistake about it, coming at the end of a week that saw dramatic up and down spikes in the stock market – Yellen was sending a pivotal message to the Wall Street wealth hoarders – your billionaire standing could be as ephemeral as a day lily if we don’t fix this income and wealth gap.[...]

"The way to bring a Price System to its logical conclusion is to give it enough rope and let it hang itself. We don't want the politician thrown out, we want him to stay there as long as he can run it. Let the politicians run the system right into the ground -- then take the rap for it. Let them run until human intolerance cries, "Stop! This is enough!" "

- HOWARD SCOTT TOUR IN SOUTHERN ALBERTA Sept. and Oct., 1937


I have said this before and I will say it again: Contrary to what Libertarians think, 'free market' is not the gateway to saving the system. It is a very unelegant, thoroughly, and extremely effective way of dooming it.

28.11.2014 20:57
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Helsworth
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Post: #3
RE: Income and wealth inequality are near their highest levels in the past hundred years

Yeah, Diego, but the "fall" of the system creates a vacuum - and usually those vacuums are filled by violent political forces. It basically comes down to the faith of the military/bureaucratic/institutional hierarchy in the alternative. Currently, we have forces in power who are trying to rob us of the gains the Welfare state supporters obtained for everyone after/during the Great Depression. And the (orthodox) school who's supporting this decades-long process is the MONETARIST school.
Cyber-libertarians claiming it's Keynesianism have never set foot in an economics University classroom. The professors barely mention Keynes and sum up his General Theory as a republican would sum up the "fraud" of climate change.
Howard Scott might be in favor of the end game coming from the race to the bottom, but I'm not in favor of it. Cause by the time the technocrats (hopefully) grab the power, we're gonna be long dead from exsanguination...


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28.11.2014 21:45
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Rising Phoenix
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Post: #4
RE: Income and wealth inequality are near their highest levels in the past hundred years

Helsworth Wrote:
Yeah, Diego, but the "fall" of the system creates a vacuum - and usually those vacuums are filled by violent political forces. It basically comes down to the faith of the military/bureaucratic/institutional hierarchy in the alternative.

I am aware. Technocrats warned that unless the people got together and demanded Technocracy in a refferendum (which is the preffered choice, after all), the system would change top-down, not down-top.

Then again, this is also true for any changes between the existing system as well. Gorbachev did not come from nowhere, he was carefully picked and placed.

Helsworth Wrote:
Currently, we have forces in power who are trying to rob us of the gains the Welfare state supporters obtained for everyone after/during the Great Depression.

I know. But chances are that anorther Great Depression needs to take place for people to be completely aware of the uselessness of Neoliberalism. History tells us that humans tend to disregard history - unless they have experienced it themselves.

Helsworth Wrote:
And the (orthodox) school who's supporting this decades-long process is the MONETARIST school.

Helsworth Wrote:
Cyber-libertarians claiming it's Keynesianism have never set foot in an economics University classroom. The professors barely mention Keynes and sum up his General Theory as a republican would sum up the "fraud" of climate change.

Well, depends on the professor of course. I imagine things are more uniform in Europe and the United States, considering they are the major supporters of Neoliberalism and all.

Helsworth Wrote:
Howard Scott might be in favor of the end game coming from the race to the bottom, but I'm not in favor of it. Cause by the time the technocrats (hopefully) grab the power, we're gonna be long dead from exsanguination...

Ideally, the people themselves would realize what is wrong and take measures themselves. Against Neoliberalism, Neofascism, or whatever other ills can be thought of.

In practice, you know as well as anyone that if people did things like that we would not even be discussing Neoliberalism right now.

29.11.2014 08:38
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Richard Wilson
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Post: #5
RE: Income and wealth inequality are near their highest levels in the past hundred years

All she can do is keep interest rates low (which shouldn't be a problem given global disinflation) and pay lip service.

29.11.2014 19:03
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Helsworth
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Post: #6
RE: Income and wealth inequality are near their highest levels in the past hundred years

Richard Wilson Wrote:
All she can do is keep interest rates low (which shouldn't be a problem given global disinflation) and pay lip service.

Yep. However, QE was just more help for the failed banking (ponzi austerity), whilst everyone else had to take it in the ass from the government; at both national and local level. The FED should have simply kept the rate at 0% via the federal funds market. Buying up treasuries and mortgage backed securities in exchange for reserves only appreciated these useless assets. Also, QE limited government interest payments to the economy (causing lower AD in the system).
It really bothers me that I see so many clueless people on the internet who "know everything" blaming Keynesian policy for the financial crisis and its aftermath. I always tell them, it's not Keynesianism, it's MONETARISM!!!


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29.11.2014 21:43
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Richard Wilson
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Post: #7
RE: Income and wealth inequality are near their highest levels in the past hundred years

Driving up asset values stimulates growth via wealth effect so, to what extent it reduced aggregate demand, if at all, via reduced interest payments, is open to discussion. I mean, the Fed could have directly purchased corporate bonds and equities (which could have channeled money directly into the system rather than having much of it sit on bank balance sheets), but still. And I don't blame neither for the crisis. Smile irrational exuberance has been around since the dawn of time and will be around until humanity ends / machines liberate us from our toil. The natural cycle of binge and purge can be observed at all levels of nature.

30.11.2014 10:32
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Helsworth
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Post: #8
RE: Income and wealth inequality are near their highest levels in the past hundred years

Richard Wilson Wrote:
Driving up asset values stimulates growth via wealth effect so, to what extent it reduced aggregate demand, if at all, via reduced interest payments, is open to discussion. I mean, the Fed could have directly purchased corporate bonds and equities (which could have channeled money directly into the system rather than having much of it sit on bank balance sheets), but still. And I don't blame neither for the crisis. Smile irrational exuberance has been around since the dawn of time and will be around until humanity ends / machines liberate us from our toil. The natural cycle of binge and purge can be observed at all levels of nature.

The problem is that the people running the FED were content to perpetrate ponzi-austerity, just as they did it in the EZ. Sure, buying corporate bonds or even household bonds would have been a lot better instead of fueling banks with reserves. Thing is, QE meant buying up mortgage backed securities and treasuries 50/50. As we all know, banks earn more interest on treasuries. They earn around 1/4 of a percentage point of interest on reserves.
Private debt deflation cannot be countered-acted with monetary policy, and the FED should have said this from the get-go. You know, if you're a clueless politician, at least let the automatic fiscal stabilizers do their jobs of acting counter-cyclically to expand the fiscal deficit - don't start implementing pro-cyclical/pro-active austerity measures to kill people while they're trying to deleverage.


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30.11.2014 10:56
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Rising Phoenix
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Post: #9
RE: Income and wealth inequality are near their highest levels in the past hundred years

Helsworth Wrote:
Howard Scott might be in favor of the end game coming from the race to the bottom, but I'm not in favor of it. Cause by the time the technocrats (hopefully) grab the power, we're gonna be long dead from exsanguination...

Just thought I should elaborate on this. The original technocrats were not in favor of 'letting everything run amok'. Rather, they knew that the system's days were counted and rather than keeping it on life support they decided to design a replacement. Kind of how one replaces a primitive machine with a more advanced one.

Technocrats also warned that we could either have Technocracy or chaos, technocracy was never imminent. It is just that keeping the current system on life support will not solve it's underlying issues.

All of the Earth's issues are caused by a single root caused. Someday we will have to face it - or fall lower than the muck we originally came from.

30.11.2014 12:37
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Roger Mexico
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Post: #10
RE: Income and wealth inequality are near their highest levels in the past hundred years

Richard Wilson Wrote:
All she can do is keep interest rates low (which shouldn't be a problem given global disinflation) and pay lip service.


There's the rub, really. If you want to redistribute wealth, that's mainly going to involve legislative action--tax policy, wage regulations, and so forth. The elephant in the room is of course international trade and its role in the destruction of institutions like trade unions.

I don't know what the solution is, but while positions like Fed chair or Treasury Secretary provide a sort of bully pulpit for ideas about economic paradigms, there isn't all that much that a person in these positions can actually do to effect changes in the system beyond monetary policy.

(And, not being a Monetarist, I'm inclined to say that influence over monetary policy doesn't amount to all that much influence on the economy overall.)

Personally, I'm hoping Elizabeth Warren's current semi-celebrity status doesn't lead to an ill-fated presidential run or a cabinet appointment. I think she's already right where she's needed--in Congress, acting as a potential leader in the formation of a caucus that might take up these issues from a legislative standpoint. If the Democrats get thrashed as badly in the next round of elections as they did in the most recent one, maybe they'll get a clue and start paying attention to what their populist wing has been saying for years now.

Or not. Hard to say. US politics is a depressing carnival of failure for the most part.

01.12.2014 06:17
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