Yellen about Inequality

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Janet Yellen speaks out on inequality by Joseph Lawler

Federal Reserve chairwoman Janet Yellen warned Friday that U.S. inequality may pose a threat to the country's values.

Yellen's words, made at a conference on inequality in Boston, marked a departure from normal practice for the Fed chair, who typically restricts her comments to the central bank's business of monetary policy and federal regulation. Yellen focused exclusively on inequality, even though recent market turmoil has raised questions about the strength of the economic recovery and the Fed's plans for interest rates and large-scale bond purchases.

"The extent of and continuing increase in inequality in the United States greatly concern me," Yellen said. She warned that "it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity."

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In particular, Yellen warned that high inequality could lead to lower economic mobility, citing the "Great Gatsby Curve" popularized by former Obama economic adviser Alan Krueger that drew a negative relationship between inequality and mobility across countries.

Yellen did not address the potential effects that rising inequality could have on conducting monetary policy, for example by affecting consumer spending or debt trends, both of which are topics that drawn attention from other central bankers.

Instead, she ran through the facts on income and wealth inequality taken from the Fed's recently-released Survey of Consumer Finances, a survey of more than 6,000 families that is considered the authoritative source on U.S. wealth trends. This year's release of the survey showed that median incomes and wealth have continued to fall since 2010. Yellen mentioned that the share of wealth controlled by the wealthiest 5 percent of American households has risen from 54 percent in 1989 to 63 percent in 2013.

The survey's results, said Yellen, indicate that economic opportunity is largely shaped by resources available for young children, higher education, ownership of a family business and inheritance.

Although Yellen has discussed inequality before, it usually has been at the insistence of a member of Congress during congressional testimony, and she has kept her remarks brief. Although the Fed chair did not sketch out any particular response to rising inequality, such as increased tax increases on the wealthy desired by, she did tiptoe closer to the controversial topic off class warfare than she has at any time since taking over from Ben Bernanke in January.

Source: http://www.washingtonexaminer.com/janet-yellen-speaks-out-on-inequality/article/2554923

Comments

Is Yellen suggesting we cancel the Refugee immigration program ?

Norb Leahy, Dunwoody GA Tea Party Leader