Daily Gold Market Report

The Cantillon Effect in Action:
Federal Reserve Policies and the Widening Wealth Gap

(USAGOLD – 4/15/2024) Gold prices are higher this morning after geopolitical tensions surged in the Middle East over the weekend. Gold is trading at $2350.29, up $5.92. Silver is trading at $28.61, up 73 cents. The recent article “The Rich get Richer. Thanks to the Fed.” from Peter St. Onge, discusses the significant increase in wealth among America’s richest due to Federal Reserve policies, particularly during the pandemic. The wealth of the top 1% in the U.S. reached an all-time high of $45 trillion, a 50% increase from 2020, largely fueled by the Fed’s massive money printing efforts amounting to $6 trillion in two years. This influx of new money primarily benefited financial markets and the wealthy, as the Fed’s method of increasing the money supply involves buying financial assets and subsidizing lending, a process known as Quantitative Easing. The article explains the Cantillon Effect, where new money benefits the rich first, with inflationary effects trickling down to impact the rest of the population, particularly harming those on fixed incomes like social security and pensioners. He concludes by stating that the Fed’s actions inherently drive inequality, serving the interests of the wealthy at the expense of the broader population.

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