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Wednesday, November 02, 2011

Bernanke on Income inequality

by Calculated Risk on 11/02/2011 11:43:00 PM

From Fed Chairman Ben Bernanke:

I certainly understand that many people are dissatisfied with the state of the economy. I'm dissatisfied with the state of the economy. Unemployment is far too high. Inequality, which is not a new phenomenon, it's been going on - increases in inequality have been going on for at least 30 years. But, obviously, that - as that has continued we now have a more unequal society than we've had in the past.

So, again, I fully sympathize with the notion that the economy is not performing the way we would like it to be, and in that respect the concerns that people express across the spectrum are -- are understandable.
I think the best way to address inequality is to create jobs. It gives people opportunities. It gives people a chance to earn income, gain experience and to ultimately earn more. But that's an indirect approach that's really the only way the Fed can address inequality per se.
I think it would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs.
A weak economy, few jobs, and rising inequality will lead to more social unrest.

As an example, from the San Francisco Chronicle: Occupy Oakland crowd marches on port
Thousands of people jammed into downtown Oakland on Wednesday for a general strike called by Occupy Oakland to protest economic inequity and corporate greed - then marched en masse to the Port of Oakland and shut it down.
Protesters smashed windows around 3 p.m. at a Wells Fargo Bank branch at 12th Street and Broadway, a Bank of America near Lake Merritt, a dry-cleaning store and a financial office on Webster Street near 21st Street, and at a Whole Foods store on Bay Place ...