Tags: Piketty | Fed | income | wealth

Piketty: Fed's Huge Stimulus Mostly Benefits the Rich

By    |   Monday, 02 Jun 2014 12:28 PM

French economist Thomas Piketty, who has created a global stir with his new book, "Capital in the Twenty-First Century," says the Federal Reserve's massive easing program is disproportionately helping the wealthy.

Quantitative easing has pushed the Fed's balance sheet to more than $4 trillion, and its federal funds rate target has stood at a record low of zero to 0.25 percent since December 2008.

"Those who are gaining from all this printing of money are not the people that you'd like to gain," Piketty tells CNBC.

Editor's Note:
18.79% Annual Returns ... for Life?

"You certainly need to ask more of these top income groups who got between two-thirds and three-quarters of aggregate income growth over the past 30 years."

What he wants to see from the wealthy is higher tax payments.

"If you have a progressive tax on income and wealth, you have a better sense of who's paying," Piketty notes. "And you have a better sense of where the money is going, and whether you have an equitable distribution of the burden."

Higher taxes on the rich wouldn't be necessary if the economy was growing faster, he said. "But if you have relatively mediocre growth performance . . . and three-quarters of [the wealth] gets to the top, it's not a good deal for the middle class and the rest of the population."

Meanwhile, Nobel laureate economist Paul Krugman defends Piketty from charges by the Financial Times that errors in his data question his conclusion that income inequality is growing.

"The crucial assertion that there is no clear trend toward increased concentration of wealth rested on a known fallacy, an apples-to-oranges comparison that experts have long warned about," Krugman writes in The New York Times.

That apples-and-oranges comparison involved mixing surveys of people about their finances, which can be unreliable and typically track the poor and the middle class, with tax data, which are used to gather data for the wealthy. "This produced an automatic bias against finding an upward trend," Krugman argues.

Editor's Note: 18.79% Annual Returns ... for Life?

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Economy
French economist Thomas Piketty, who has created a global stir with his new book, "Capital in the Twenty-First Century," says the Federal Reserve's massive easing program is disproportionately helping the wealthy.
Piketty, Fed, income, wealth
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2014-28-02
Monday, 02 Jun 2014 12:28 PM
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