ZIRP: Taking From the Poor, Giving to the Rich – Nom de Plumber’s Thought of the Day

ndp  Nom de Plumber is a Nom de Plume

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This article (courtesy of LinkedIn post by David Stevens) astutely notes that ZIRP (*) is the Great Reverse-Robin-Hood.

http://www.washingtonpost.com/business/economy/fiscal-trouble-ahead-for-most-future-retirees/2013/02/16/ae8c7350-5905-11e2-88d0-c4cf65c3ad15_story.html

How?

Central banks target zero interest rates to re-inflate stocks, bonds, and realty—which the rich naturally own.  Zero rates are also artificial price controls on capital, discouraging long-term credit creation and entrepreneurial risk-taking, retarding economic growth. (Refer to post-1990 Japan and post-2008 world.)Slow global growth especially hurts the poor, who suffer weakened wages.  Worse yet, as Baby Boomers and retirees compete for jobs to offset lost interest income, wages cannot easily grow.
This compounds the other main type of inequitable transfer under ZIRP, from savers to borrowers. Central bankers should be taking note.

Thank you.

Note to new readers: ZIRP is the Fed’s Zero Interest Rate Policy. NDP first mentioned its dangers on this blog in 2008. 

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