Debate Rages on Quantitative Easing’s Effect on Inequality

Since the global debt crisis of 2008, central banks in the US, Japan and the UK have embraced policies of quantitative easing, designed to expand currency supplies and keep interest rates low to encourage economic and job growth. But conservatives in the US and liberals in the UK claim the policies have led to rising income inequality for the advanced economies, reports Chris Giles for Financial Times: “These criticisms were fuelled by Bank of England research showing that QE boosted asset prices and household financial wealth, which is ‘heavily skewed with the top 5 per cent of households holding 40 per cent of these assets.’” Bankers defend the policies, suggesting the policies softened the impact of recession and reduced its length. Other analysts conclude that any policy aiming for economic recovery will always deliver more benefits to those holding most wealth. – YaleGlobal