While the political left may have been the most critical voice of the wealth inequality, ironically it may have been a combination of the government and Federal reserve under a Democratic presidency that oversaw the creation of the so-called “1%”. Quantitative Easing inflates financial asset prices while causing stagnation and growing debt levels in the real economy, causing the rich to get richer, and the working class to stay poor. This is one of the primary drivers behind both the radical left and the radical right, as groups and individuals express their anger about the world from different sides of the political spectrum.
This phenomenon hasn’t just been a widening wealth inequality within developed nations, but also between developed and developing nations. When central banks in developed nations, particularly the United States, print bank reserves, they devalue the savings of developing nations who hold their government debt as reserves. As the world’s reserve currency, the United States confiscates purchasing power from the rest of the world and can use it to bail out its banks, prop up assets prices, or even spend fiscally.
This is one of the primary drawbacks of policies such as UBI or MMT. While they might go some way to start addressing the wealth inequality within the US, they may do so at the expense of poorer nations who will have their reserve assets devalued, and may import inflation from the developed world. Such as phenomenon has already been suggested as part of the underlying reasons for the Arab Spring, as Quantitative Easing spilled over into other nations.
For more visit the Times and Guardian articles linked below.
