The Libertarian Case for RFK’s Attack on BlackRock, Part 3
The Fed has been running its printing presses on double-overtime since 1987, but as we saw in Part 2 the principal result of that apostasy has been nearly $50 trillion of excess financial assets and a $32 million per household gain in net worth among the top 1% or 800X more than the $40,000 per household gain among the bottom 50%.
And, yes, the Fed heads apparently didn’t intend it—even as they frequently deny the very facts of it as posted on their own website (i.e., FRED). Still, giving the Eccles Building the benefit of the doubt doesn’t work, either. That is to say, they claim their actual objective was enhancing all-in macroeconomic performance—meaning higher economic growth, more jobs, higher investment, more housing, higher per capita real incomes etc. than would be the case if the free market were left to its own devices.
As it happens, however, this is true only in the same sense as the crazy man who sits on his front porch waving a stick day-after-day, claiming that this procedure has reliably kept the elephants off his property. Likewise, the Fed’s goal-seeked models claim it would have been worse without their ministrations, but then when have Fed models ever been reliable?
In the real world, in fact, there is not a shred of evidence that the explosion of fiat credit since Greenspan’s arrival at the Fed in August 1987 has improved the lot of main street at all, and has almost surely made it worse.
So let’s start with housing, which was the gravamen of RFK’s attack on BlackRock. It turns out that it was Blackstone, not BlackRock, which bulked-up big time in the Wall Street based buy-to-rent business, but that’s essentially all in the family. The underlying issue, actually, is why this happened only after the 2007 crisis, not decades before.
After all, if Wall Street’s sudden scarfing-up of (mostly defaulted) single-family homes represented a breakthrough for free market efficiencies and a better rental housing mousetrap, why didn’t this modality of rental property investment take off in the 1960s and 1970s, when the baby-boom was flooding into the market for homes? Or in the early 1980s when tax incentives for housing ownership were especially compelling? Or in the 1990s when Wall Street was booming and looking high and low for new asset classes to invest in?
The truth is, the Fed’s unhinged money-printing policies—especially since the dotcom crash and the cheap money-binge which followed—have functioned to make debt cheap and financial assets dear. And capturing the spread via heavily leveraged investment schemes is what really brought Wall Street into the single-family rental market. Nothing more.
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