Despite two stock market booms, there has been no real income growth since 1994:
Despite ultra-loose monetary policies over the past several years,
incomes adjusted for inflation have fallen for the median U.S. family.
With the benefits of monetary expansion going to a small share of the
population and wage growth stagnating, incomes have been essentially
flat over the past 20 years. In the long run, however, classical economics would tell us that the
pricing distortions created by the current global regimes of QE will
lead to a suboptimal allocation of capital and investment, which will
result in lower output and lower standards of living over time. In fact,
although U.S. equity prices are setting record highs, real median
household incomes are 9 percent lower than 1999 highs. The report from
Bank of America Merrill Lynch plainly supports the conclusion that QE
and the associated currency depreciation is not leading to higher global
output. The cost of QE is greater than the income lost to savers and
investors. The long-term consequence of the new monetary orthodoxy is
likely to permanently impair living standards for generations to come
while creating a false illusion of reviving prosperity.
Karl Denninger was among the first to point out that even if it worked, Quantitative Easing could not possibly do what was claimed of it. Thus demonstrating what I pointed out, which is that it was merely about buying more time for the bankers to make hay before the eventual crash of the global economy. We’re already seeing signs of the wars that conventionally accompany depressions, and depending upon your definition of depression, we’re only six years into this thing.