Tags: welfare | inequality | assistance | Wall Street

Welfare for the Wealthy Is Insidious to Our Economy

By    |   Friday, 22 Nov 2013 07:11 AM

Wall Street has received more than $29 trillion in liquidity by the Federal Reserve over the past five years to continue their operations. This figure includes financial asset purchases, direct loans and guarantees.

The financial and insurance industry employs approximately 6 million individuals nationwide, according to the Bureau of labor Statistics. Theoretically, each employee has received nearly $5 million in liquidity from the Fed during the last five years, or $1 million per year.

Compare this to welfare for the indigent. Each year, the U.S. government issues nearly $1 trillion in means-tested government benefits (welfare payments) to approximately 100 million people, or $10,000 per person each year, according to the U.S. Census Bureau and Treasury.

Therefore, those involved in finance and insurance received 100 times more in assistance from the federal government than did those most in need.

This massive redistribution of wealth by the Fed "has helped only Wall Street and the wealthiest 5 percent of the country that owns appreciating assets such as stocks and real estate," said Simon Baker, CEO of Baker Ave. Asset Management.

Moreover, the payments to Wall Street have not been used to promote investment, employment and income generation. Unearned income from the stock market or bonds is relatively small relative to lost earned income for the masses due to unemployment and underemployment. Even with low interest rates, debt service on new home purchases may not be achievable if employment and income prospects are dismal.

"[Quantitative easing] is not encouraging banks to do more loans, and it's not encouraging people to hire more folks. So it's not helping Main Street," according to Baker. He believes stagnant income growth has exacerbated the economic inequality between the ultra-wealthy and average Americans.

Growing inequality portends poorly for future economic stability and sustainability. Incentives that increase long-term investment are key to fostering a real economic recovery.

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Wall Street has received more than $29 trillion in liquidity by the Federal Reserve over the past five years to continue their operations. This figure includes financial asset purchases, direct loans and guarantees.
welfare,inequality,assistance,Wall Street
308
2013-11-22
Friday, 22 Nov 2013 07:11 AM
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