In other words, upper class and some middle class people are getting to spend new money and take away the buying power of the poorest among us.
In the last five years the dollar has lost at least a fifth of its value. It is going to lose more than that in the next five.
Well, prices fell during the Great Depression (and in most depression/recessions prior to TGD), but I don’t think poorer folk were somehow coming out better.
Didn’t prices need to adjust? Market corrections are painful for everyone.
Heroin withdrawal is horrible, but it is usually a poor reason for sticking with the drug.
(up sick and thus checking my email)
Mark, Bernanke’s stated goal is to let the market players take their medicine while minimizing the impact to others in the economy. Given our current system and the mess it is in, it isn’t clear (to anyone, apparently) how to do that. But I don’t think it is an accurate summary to say Bernanke was protecting the rich at the expense of the poor. The system may be biased that way, but I’m not convinced he is as well.
Mark,
My only point is that saying that rising prices necessarily hurt the poor is as naive as saying lower prices necessarily help them. The answer is: it depends. And it depends on more than simply identifying whether nominal prices are going up or down.
Rising or falling prices aren’t what’s at issue here — the real concern is that new money is being created. Obviously, this causes prices to rise, but the _way_ this happens is the significant part. It takes time for prices to rise after creation of new money — and so some people get to buy things with new money at old prices.
Even if the distribution of newly created money was somehow done equally, and everyone’s bank balances went up the same amount at the same time, people who spent money quickly would benefit at the expense of people who saved money (because those who saved would have to pay the resulting higher prices).
The further damaging effect is that this money is _not_ distributed equally, and does in fact go to people who can invest significantly in the stocks/bonds markets. So yes, this kind of manipulation not only robs from the poor to fatten the rich, it simultaneously discourages everyone from saving, further oppressing us.