By now everybody knows that the primary consequence, one which we originally predicted back in 2009 – and many have since agreed – was completely intended, of the past 6 years of unprecedented monetary policy has been to push wealth inequality to record levels, not just in the US but across the world. What may not be so clear is precisely when this period of unprecedented wealth disparity started. The answer, as the following handy chart from NPR shows, is that long before QE, the wealth gap for the 1% really started in the early 1980s, courtesy of none other than Greenspan’s “great moderation.”
More importantly, and what is certainly not known, is that between 1930 and 1970, it was only the “bottom 90%” that saw their incomes rise, as can be seen on the next chart.
This is how the NPR qualified this dramatic variance in wealth gaps, the first of which benefited most Americans, especially the middle-class, and which ended with a thud in the early 1970s, and the second which was unleashed in the early 1980s:
In the first phase, known as the great compression, inequality fell. Incomes rose for people in the bottom 90 percent of the income distribution, as the postwar boom led to high demand for workers with low and moderate skills.
At the same time, income was basically stagnant for the top 1 percent of earners. A combination of high marginal tax rates (around 80 percent) for the wealthy, and social norms, may have kept a lid on wages at the top, according to the economists who gathered the data we used to make the graphs.
In the last 35 years, the reverse occurred. Top marginal tax rates fell sharply. Incomes rose for those in the top 1 percent, largely driven by rapidly rising pay for top executives.
And this is how NPR tries to describe the transformation that took place: “a combination of global competition, automation, and declining union membership, among other factors, led to stagnant wages for most workers.”
Sure, why not.
But while we are all speculating, there is one far more important and very critical event on the calendar that happened just as the ascent of the non-1% peaked.
Which should also clarify just why to the “1%”, including their protectors in the “developed market” central banking system, their tenured economist lackeys, their purchased politicians and their captured media outlets, the topic of a return to a gold standard is the biggest threat conceivable.