Horowitz: The immoral income inequality created by COVID fiscal and monetary policies

For years, we were lectured to by liberals that income inequality based on natural factors was a societal ill that engendered a need for government to redistribute wealth from the wealthier to the less fortunate. Yet it turns out that their policies of endless fiscal and monetary stimulus, culminating with the catastrophic COVID policies, unnaturally made the wealthy wealthier at the expense of the core middle and middle-upper income earners, all the while making lower-income people dependent upon endless handouts with no upward mobility. Somehow, they have no problem with income inequality so long as government, not natural law, is the culprit.

The human toll of our COVID policies is unrivaled in human history and will be felt for years to come. But the economic toll might last even longer. Our government injected $11 trillion into the economy, created out of whole cloth, in what should have been decades’ worth of spending, but it was packed into a little over a year.

So what were the results? We always knew that when the government spends ungodly sums of money, it is undergirded by a targeted agenda to pick winners and losers. Who won and who lost in the COVID print-a-thon? There are several ways to skin this cat, but nothing demonstrates the massive transfer of wealth better than the following Federal Reserve charts depicting the percentage of assets owned by income percentile before and after the COVID spending bomb.

Here is the trajectory for the top 1%:

As you can see, the top 1% own nearly 30% of all assets in the country. I don’t inherently have a problem with this, but the fact that their share of the pie jumped more than 10% in just one year from the COVID money printing that should bother us all. Now, let’s contrast the results of this trend in 2020-2021 with those in the 50%-90% wealth bracket, roughly the people who once composed the great American middle class and small business owners.

While the top 1% increased their share of the pie by 10%, the middle and upper middle class decreased their share by 7%. The share of assets that the top 1% hold are roughly on par with all the individuals in the 50th-90th percentile. Prior to the Federal Reserve and Congress’ money printing schemes beginning in the 2000s, the upper middle class accounted for almost twice as many assets as the top 1%.

While the upper middle class took a hit, exemplified through the permanent closure of 10,000 businesses, the communists made sure to keep the lower-income folks temporarily content with the lockdowns by making them eligible for thousands of dollars of “stimulus” handouts. Their share of the pie skyrocketed by over 20% in just one year!

As you can see, they initially also took a hit with the shutdown, but eventually the endless government checks worked their magic. Obviously none of this is economically healthy, because these people have few prospects for upward mobility.

What is the result of this great transfer of wealth? We were all shocked and appalled when Obama began setting the precedent for $1 trillion annual budget deficits. Well, our government just announced a $1.1 trillion deficit from the first half of this fiscal year. Most Americans cannot afford the predictable inflation resulting from the endless printing of money, as online grocery prices were up 10.3% just in March. In order to create this great transfer of wealth, our government increased our money supply from $4 trillion to $19 trillion in one year!

It doesn’t take a genius to understand why $100 pre-COVID in 2020 is now worth just $86 today! The purchasing power of the dollar is now down nearly 40% of what it was just a generation ago, and no, wages have not grown commensurately.

How’s that for income inequality? All that money printing that benefited the wealthy and well connected was worth the inflationary effects for them, but not for those less fortunate, especially those who don’t want to live off welfare.

Andrew Jackson presciently warned about the effects of a central bank and its ability to manipulate the economy tendentiously for the well connected rather than allowing the free market to control the flow of money and interest rates.

“It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes,” wrote Jackson in his 1832 veto message on the bill re-chartering the national bank. He had no problem with God-ordained inequality resulting from natural law, but government is not natural law. Jackson continued: “Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.”

Jackson ended by powerfully noting, “There are no necessary evils in government. Its evils exist only in its abuses.”

None of what we face today was inevitable or necessary. It was all done by our government without most of these acts passing through the legislative process thanks to the Federal Reserve.