Engine of Inequality - The Fed and the Future of Wealth in America

The first book to reveal how the Federal Reserve holds the key to making us more economically equal, written by an author with unparalleled expertise in the real world of financial policy
 
Following the 2008 financial crisis, the Federal Reserve's monetary policy placed much greater focus on stabilizing the market than on helping struggling Americans. As a result, the richest Americans got a lot richer while the middle class shrank and economic and wealth inequality skyrocketed. In Engine of Inequality, Karen Petrou offers pragmatic solutions for creating more inclusive monetary policy and equality-enhancing financial regulation as quickly and painlessly as possible.
 
Karen Petrou is a leading financial-policy analyst and consultant with unrivaled knowledge of what drives the decisions of federal officials and how big banks respond to financial policy in the real world. Instead of proposing legislation that would never pass Congress, the author provides an insider's look at politically plausible, high-impact financial policy fixes that will radically shift the equality balance. Offering an innovative, powerful, and highly practical solution for immediately turning around the enormous nationwide problem of economic inequality, this groundbreaking book:
* Presents practical ways America can and should tackle economic inequality with fast-acting results
* Provides revealing examples of exactly how bad economic inequality in America has become no matter how hard we all work
* Demonstrates that increasing inequality is disastrous for long-term economic growth, political action, and even personal happiness
* Explains why your bank's interest rates are still only a fraction of what they were even though the rich are getting richer than ever, faster than ever
* Reveals the dangers of FinTech and BigTech companies taking over banking
* Shows how Facebook wants to control even the dollars in your wallet
* Discusses who shares the blame for our economic inequality, including the Fed, regulators, Congress, and even economists
 
Engine of Inequality: The Fed and the Future of Wealth in America should be required reading for leaders, policymakers, regulators, media professionals, and all Americans wanting to ensure that the nation's financial policy will be a force for promoting economic equality.

List of contents

Acknowledgments xi
 
About the Author xiii
 
Introduction xv
 
Chapter 1 Inequality: Why It's So Much Worse and What to Do About It 1
 
What We Know about Inequality that Economists Don't 4
 
The Economic-Recovery Mirage 5
 
Why So Unequal So Fast? 7
 
Regulatory Wreckage 12
 
How to Fix Financial Policy 14
 
Chapter 2 How Unequal Are We? 18
 
Economic Inequality Fundamentals 19
 
Who Has How Much 22
 
What of Wealth? 24
 
The Inequality Engine 24
 
Worse Than That 25
 
The Most Inclusive Ever? 27
 
The Great Financial Crisis and Its Equality Aftermath 29
 
Chapter 3 What Makes Us So Unequal 32
 
The Mechanical Engineering of Economic Inequality 34
 
Death and Taxes 35
 
The Role of Transfer Payments 37
 
A Supply-Side Solution? 38
 
Public Wealth: A Sputtering Part in the Equality Engine 39
 
Is Education the Answer? 41
 
Is Trade Policy a Problem? 42
 
Global Policy Reform? 43
 
What to Do? 45
 
Chapter 4 Why Does Economic Inequality Matter So Much? 46
 
Inequality and Mortality 47
 
Political Polarization 49
 
Inequality's Eviscerating Cost 50
 
Inequality and the Long Recession 52
 
Financial-Crisis Risk 53
 
Chapter 5 Following the Money 55
 
How Central Banks Work 57
 
The Modern Monetary-Policy Construct 60
 
The Fed's Bailout Buckets 62
 
The Fed's Payment Powers 64
 
Rules of the Financial Road 65
 
Four Fundamental Financial-Policy Flaws 69
 
Chapter 6 How Monetary Policy Made Most of Us Poorer 73
 
The Fed's Heavy Hand 76
 
Why It's the Fed's Fault 77
 
How Ultra-Low Interest Rates Made America Still Less Equal and QE Still More Inequitable 80
 
The High Cost of Low-Rate Debt 83
 
The Low-Unemployment Myth 85
 
The Anti-Wealth Effect 87
 
Making Matters Still Worse 91
 
A Bigger Fed, Lower Rates, an Extreme Financial Crisis 93
 
Chapter 7 How to Make Monetary Policy Make Us More Equal 95
 
The Aggregate-Data Error 98
 
The Fed's Real Mandate 102
 
The Fourth Mandate 104
 
The Fed's Giant Faucet 105
 
Possible Solutions 108
 
Slowing the Inequality Engine 111
 
Chapter 8 Reckoning with Regulation 113
 
Consumer Finance Before the Crash 115
 
Are Debtors Just Deadbeats? 117
 
Are Banks to Blame? 118
 
The Businesses Banks Left Behind 120
 
Other Precursors of the Crash That Came 121
 
Capitalism and Capital Regulation 123
 
A Capital Cure 127
 
Going with the Flow 128
 
Death without Destruction 130
 
The Consumer-Protection Quagmire 131
 
An Unreadable Rulebook Thrown Only at Banks 133
 
The Bleak Outlook and a Better Future 134
 
Chapter 9 Remaking Money 137
 
What Money Is and Will Be 139
 
The Great Unequalizer 141
 
Turning Money into Data 143
 
What Makes Money Good Money 145
 
Crafting a Good Digital Dollar 146
 
How Money Moves 148
 
The Central-Bank Solution 151
 
Chapter 10 Rules to Equitably Live By 153
 
Why Not Just Deregulate? 156
 
Learning to Love Like-Kind Rules 158
 
The Specifics of Symmetric Regulation 161
 
Raising Up the Regulatory Playing Field 162
 
Building a New, Equality-Focused Banking System 165
 
Banking While Mailing 166
 
Establishing Equality Banks 168
 
New Money for

About the author

Dubbed by American Banker as "the sharpest mind analyzing banking policy today-maybe ever," KAREN PETROU is one of the most influential experts on financial policy and regulation in the world. She is cofounder and Managing Partner of Federal Financial Analytics, a consulting firm that provides analysis and advisory services on legislative, regulatory, and public-policy issues. Known for nonpartisan analysis, Petrou has testified before many U.S. government agencies. She is frequently interviewed for expert commentary and her work has been featured in the Financial Times, Wall Street Journal, American Banker, and Marketplace. Recently, Petrou has been featured for her pro bono work developing a new financial instrument to speed treatments and cures for disabilities and diseases, starting with those that cause severe vision impairment. Karen lives in Washington D.C. with her husband Basil and guide dog, Zuni.

Summary

The first book to reveal how the Federal Reserve holds the key to making us more economically equal, written by an author with unparalleled expertise in the real world of financial policy

Following the 2008 financial crisis, the Federal Reserve's monetary policy placed much greater focus on stabilizing the market than on helping struggling Americans. As a result, the richest Americans got a lot richer while the middle class shrank and economic and wealth inequality skyrocketed. In Engine of Inequality, Karen Petrou offers pragmatic solutions for creating more inclusive monetary policy and equality-enhancing financial regulation as quickly and painlessly as possible.

Karen Petrou is a leading financial-policy analyst and consultant with unrivaled knowledge of what drives the decisions of federal officials and how big banks respond to financial policy in the real world. Instead of proposing legislation that would never pass Congress, the author provides an insider's look at politically plausible, high-impact financial policy fixes that will radically shift the equality balance. Offering an innovative, powerful, and highly practical solution for immediately turning around the enormous nationwide problem of economic inequality, this groundbreaking book:
* Presents practical ways America can and should tackle economic inequality with fast-acting results
* Provides revealing examples of exactly how bad economic inequality in America has become no matter how hard we all work
* Demonstrates that increasing inequality is disastrous for long-term economic growth, political action, and even personal happiness
* Explains why your bank's interest rates are still only a fraction of what they were even though the rich are getting richer than ever, faster than ever
* Reveals the dangers of FinTech and BigTech companies taking over banking
* Shows how Facebook wants to control even the dollars in your wallet
* Discusses who shares the blame for our economic inequality, including the Fed, regulators, Congress, and even economists

Engine of Inequality: The Fed and the Future of Wealth in America should be required reading for leaders, policymakers, regulators, media professionals, and all Americans wanting to ensure that the nation's financial policy will be a force for promoting economic equality.

Report

"[Petrou] draws a direct connection between the Federal Reserve's decisions and the rich getting richer, with others struggling to get by."--New York Times DealBook
 
"Petrou's excellent new book explains how it has been exacerbated and accelerated by the financial policies that were set in place to save the financial system from collapse after the crisis of 2007 and 2008." --Dylan Schleicher, Editorial Director, Porchlight Books
 

"Karen Petrou has for decades played the quiet role of consultant and adviser to banks, central banks, and large investors, helping them slash through the confusion of constantly evolving monetary and regulatory policy. It's a job that prioritizes dispassionate analysis over advocacy. Today, that changes, with the publication of her new book."--Matt Peterson, Barron's
 

"Banking consultant Karen Petrou is right that Federal Reserve policies have helped the rich." --Peter Coy, Bloomberg BusinessWeek

Product details

• Authors: Karen Petrou
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 31.05.2021
• EAN: 9781119726746
• ISBN: 978-1-119-72674-6
• No. of pages: 288
• Subjects: Social sciences, law, business > Business > Economics; Volkswirtschaftslehre, Economics, Finanzökonomie, Financial Economics, Finance and the finance industry