How To Liberate The Fed From Wall Street Capture—Abolish The 2.0% Inflation Target

RFK Jr. is on to something very big when it comes to the baleful state of America’s main street economy. His theme is agency capture by corporate and other interest groups, which results in what economists call illicit windfall rents. The latter, in turn, exacerbate wealth maldistribution in a manner which has nothing at all to do with honest capitalist value creation.

For avoidance of doubt, here is a comparison of the net worth gains of the top 1% of households since 1990 with total wages and salaries paid to America’s entire work force. During that 32-year period, 160 million workers gained 304% in combined income compared to the 820% gain in the total net worth of the top 1.3 million households.

The key point here is that the black area versus the red area in the chart below measures aggregates: Total amounts of wealth held and gained by the tippy top of the economic ladder versus total wages and salaries paid to every single worker in America who drew even one paycheck over the period.

The fact is, this huge growth differential stems from the manner in which monetary inflation confers windfalls on asset-holders. As of 1990, there was no reason to suggest that the relationship between the net worth of the top 1% and the aggregate wages and salaries of all US employees was not reasonably reflective of productive capitalism at work. Or to put it more crudely, with net worth equal to 1.81X total wage and salary incomes it wasn’t evident that the rich were being short-changed by American capitalism!

Indeed, the 1980s Reagan-era had generated a nonstop tirade from the Dems and liberal press insisting that the rich were getting way too much.

Since then, however, the net worth of the top 1% has exploded skyward and now represents 4.12X the wages and salaries being earned by all American workers. And yet and yet: There is simply no plausible economic reason for this massive ratio gain…. except monetary inflation.