Some claim "the rich" will be fine—or even better off—after the COVID panic destroys the economy for most of us. But there's a problem: the wealthy depend heavily on an economy fueled by the production and consumption of all workers and entrepreneurs.
Rather than spurring real economic gains, the Federal Reserve’s unorthodox QE program has supported and extended the debt grid and generated asset exuberance. But this can only go on as long as there's capacity for more debt.
In this crisis the money supply has already increased far more than during the last crisis. But it's hard to say when this will produce inflation because we're still in the midst of a demand shock and a collapse in oil prices.
The COVID-19 panic may have sped up the beginning of this economic crisis, but the virus wasn’t the cause. The real cause of the crisis was the boom that came before it.
Contrary to Fed assumptions, we are not presently facing a problem of liquidity vis-à-vis Great Recession; we are confronted, instead, with a serious shortage of quality collateral.
Over eighty years ago, Keynes condemned the rentier and welcomed his future disappearance. Following in his footsteps, politicians and central bankers today are ever closer to effectively bringing this about.
