The Fed As A Reverse Robin Hood

Tyler Durden's picture

In today's edition of Bloomberg Brief, the firm's economist Richard Yamarone looks at one of the more unpleasant consequences of Federal monetary policy: the increasing schism in wealth distribution between the wealthiest percentile and everyone else. While the Fed's third mandate is by now all too clear: push the Russell 2000 to the highest possible level, one can now suggest that the 4th mandate is one that would make Robin Hood spin in his grave: "To the extent that Federal Reserve policy is driving equity prices higher, it is also likely widening the gap between the haves and the have-nots....The disparity between the net worth of those on the top rung of the income ladder and those on lower rungs has been growing. According to the latest data from the Federal Reserve’s Survey of Consumer Finances, the total wealth of the top 10 percent income bracket is larger in 2009 than it was in 1995. Those further down have on average barely made any gains. It is likely that data for 2010 and 2011 will reveal an even higher percentage going to the top earners, given recent increases in stocks." Alas, this is nothing new, and merely confirms speculation that the Fed is arguably the most efficient wealth redistibution, or rather focusing, mechanism available to the status quo. This is best summarized in the chart below comparing net worth by income distribution for various percentiles among the population, based on the Fed's own data. In short: the richest 20% have gotten richer in the past 14 years, entirely at the expense of everyone else.

Another indication of the increasing polarity of US society is the disparity among consumer confidence cohorts by income as shown below, and summarized as follows: "The increase in equity prices has raised consumer spirits, particularly among higher-income consumers. The Conference Board’s Consumer Confidence index for all income levels bottomed in February/March of 2009. The recovery since then has been notable across the board, but nowhere as much as for those making $50,000 or more."

Lastly, nowhere is the schism more evident, at least in market terms, than in the performance of retail stocks:

Saks chairman Steve Sadove recently remarked, “I’ve been saying for several years now the single biggest determinant of our business overall, is how’s the stock market doing.” Privately-owned Neiman- Marcus reported “In New York City, business at Bergdorf Goodman continues to be extremely strong.”

In contrast, retail giant Wal-Mart talks of its “busiest hours” coming at midnight when food stamps are activated and consumers proceed through the check-outs lines with baby formula, diapers, and other groceries. Wal-Mart has posted a decline in same-store sales for eight consecutive quarters.

The conclusion: the end of QE, for now, may help bring US society a little closer, however temporarily.

The withdrawal of Fed accomodation may eventually stop supporting a wider income gap. In the event that further support is needed for the economy, though, this result of monetary policy acting without fiscal support — food stamps, extended uninsurance benefits and so on — should be considered.

Well, further support will be needed, but since the bottom 80% of US society is largely irrelevant in all matters that matter, one can surely hope that this major strata of the population will get some more focus in the future. Although we certainly do not have big expectations.


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wandstrasse's picture

reverse Robin Hood is Dooh Nibor, sounds a bit like LIBOR.

e_u_r_o's picture

Dooh, steal from neighbour!

bigdumbnugly's picture

robin hood.  banksters in tights?

Cognitive Dissonance's picture

Sounds like a job for Super Banzai7.

Who has the Banzai7 signal light?

snowball777's picture

NIBOR: the Neighborhood Bank Origination Rate...also known as the fee at the check-cashing joint.


GeneMarchbanks's picture

Steals from the poor and gives to the rich!

Buckaroo Banzai's picture

Stupid bitch!

"blimey, this redistribution of wealth is trickier than I thought!"

Mercury's picture

 "To the extent that Federal Reserve policy is driving equity prices higher, it is also likely widening the gap between the haves and the have-nots....The disparity between the net worth of those on the top rung of the income ladder and those on lower rungs has been growing.

So, replace SNAP cards with IWM shares?

oogs66's picture

best title ever!

Cognitive Dissonance's picture

The Fed As A Reverse Robbing Hood

Fixed it for ya Tyler. No charge.

Paper CRUSHer's picture
Hey,hold on a minute there dammit. I'll fix ya both: by Paper CRUSHer on Fri, 07/16/2010 - 09:12






Surcharge.....You'll  both receive a bill later.

snowball777's picture

Have faith, supply-siders! Just keep those mouths open and skyward...the trickling will commence any minute now.

Cognitive Dissonance's picture

Like this?

Are those Fed teats government approved?

wandstrasse's picture

what is this??? looks like the foundation of a PIIGS country... just with a wolf instead of a pig.

Ghordius's picture

The she-wolf is actually Etruscan and at least two centuries older than Rome.

The cute little rascals were added in the Renaissance and depict two politicians at work.

GeneMarchbanks's picture

Very gross. Yet... pretty accurate.

Mercury's picture

The fall, not the birth of Rome is more appropriate here...

Cognitive Dissonance's picture

This was the fall of civilization. At least for anyone who stood in front of the Romans. Sounds a bit like the USA nowadays.

How many wars is the USA involved in today? Isn't the USA trying to use force to expand its economic insanity. Aren't there all those undeveloped countries just begging for the USA to straighten their asses out? 

For the first 500 years the Romans were not the smartest kids on the block. Just the most brutal and organized. They stole most of their technology and then adapted it to their needs.

Not a perfect analogy, but it works.

Mercury's picture

Hey, they invented concrete and they weren't bad at infrastructure in general. You could have done a lot worse than have been born citizen of Rome during the republic era.

Cognitive Dissonance's picture

That's exactly the type of technology (civil engineering and infrastructure) they stole and then adapted and improved upon. And they invented hydraulic concrete that sets under water, not concrete.

And that's also exactly what you could say about being a US citizen today. Well, if I'm going to be a whore I might as well be a well paid and pampered one.

Mercury's picture

Well they didn't invent conquest either, they just improved upon it. 

Organization and the effective exploitation of technology is pretty much what civilization is.

Cognitive Dissonance's picture

I already agreed the Romans were very good at what they did. And so is the USA.

That doesn't make them smart or creative or even industrious. Brutality has a way of making you look smart simply because you get what you want when you want it. The old Might Makes Right writ large.

Mercury's picture

I'm not sure the Romans were more brutal than other contemporary cultures in their corner of the globe (or most others).  At the time human life in general was nasty, brutish and short for the most part (and may yet be again!).

Many of their achievements alongside and despite  their brutality became the building blocks for subsequent civilizations that ultimately made such brutality much more rare.

Cognitive Dissonance's picture

Efficiently Brutal. You either joined or you were killed or enslaved. Period. No quarter given. And no, not everyone was like that. This is one of the myths we propagate in order to rationalize and justify the insanity. That old "Human Nature" thingy. Of course our history books will paint a picture that justifies all that has passed and explain all that comes our way.

The winners write the history book and today's winners revise the history books. Thus they will not paint an ugly or true picture if it doesn't serve a greater purpose. History is propaganda written by propagandists. And yes, it is in their best interest to show the Romans are brutal, intelligent and creative etc if that image supports other myths and perspectives being promoted today.

We are already seeing the so called history books written about both modern Iraq wars that don't paint a true picture, but do flatter the "victors" including calling them brave, industrious, kind hearted, fair and just etc. 

Ghordius's picture

CD, I thought you were a gentle soul! You are shocking me!

What are you missing, the triumphs and the executions of the enemy's leader? ;-)

Cognitive Dissonance's picture

That's the danger of contributing articles and also spending a great deal of time in the comment section. People get to see the real me and not just the one they imagine after reading my articles.


DaveyJones's picture

has anyone listened to the interview with Julian Assange in London this week? A rare public appearance. Interesting discussion on censorship and technology 

SmoothCoolSmoke's picture

Rome lasted 1200 years, and called the shots for their part of the world for 2/3 of that time.

The USA is struggling to make it to 250 years........... so don't dis the Romans so easily.

snowball777's picture

Shift Rom and Remus there a little aft and you've got the basic idea.

Cognitive Dissonance's picture

Milk, milk, lemonade, around the corner fudge is made.

DaveyJones's picture

it hits us before the fan

oldmanagain's picture

Plus ten.

Austrians unite, save the rich.  So  true.  Supply side is the greatest hoax.

Those that knee jerk against redistribution are walking in their economic sleep.  When the bell tolls, it tolls for thee.

Greeny's picture

US Retail Sales up 0.9% in June VS May.

Alcoholic Native American's picture

100%......... predictable.

Urban Redneck's picture

Yes.  Ironically, the poor got exactly what they wanted - the tax disparity matches the incomedisparity (with a odd anomaly for a small fraction of the top 1%).  By seeking to eliminate taxation of the lower and middle classes they are rendered irrelevant in the perverted congressional minds seeking primarily to refill the slop through.  And since the anomallous .0001 have a larger share of a larger pie available to maintain their "all animals are equal, but some are more equal than others" status, the practice will continue until the system collapses.  

LetThemEatRand's picture

But wait, all of my Tea Party heros keep saying that Obama is a socialist and that he hates rich people. 

Alcoholic Native American's picture

Teabaggers are truely the wize village elders in this great country of ours.

Lednbrass's picture

And on the flip side of that, every time I make this argument to a leftist going on about income inequality they flip out and defend the Fed.

Real smart people those- howl about the corps and banks yet defend the tap root that feeds them to the death.  Right now the very statist left are some of the biggest Fed defenders in the US.

Odd how in my lifetime they went from "Question Authority" in 1970 to "How dare anyone question my Authoritah!" shameless apologists for the state in 2011.

At least the Tea Party folks are having some impact- the left is nothing but a rabid watchdog for the establishment now.

karzai_luver's picture

There can be little doubt that "the left" or what's left of it is nothing more

than a shrill whore that has given up even the hope of any moral



Anyone that votes for them in the U.S. will get the horns and deserve it.

The last lefty prez was Nixon, at least as the left was defined in the U.S.

in the last 50-60 years,Clinton(s) finished off what remained of any left with

a moral stance here.


Pure scum that lot. Lies and debauchery with a fiendish grin and an aw shucks.

Perfect swill for the usless eaters in this country.


That a fascist liar such as Obama was spawned should be all the proof one needs.

That the idiot left actually projected all their lies and foolishness onto him

and thought he was their lefty lion on a white horse was horrifying to observe.


Well hope and change next time fools.



MsCreant's picture

They keep robbing and my gold and silver keep going up. Hmmm...I have mixed feelings about this.

Cognitive Dissonance's picture

Survivors guilt syndrome. With some therapy sessions, which you will be able to pay for with your Gold and Silver, you'll be fine.

Take two Gold Eagles and call me in the morning.

wandstrasse's picture

this brings me to a different question: I have a few silver eagles. 'ONE DOLLAR' is printed on them. Does this mean I can go to a US (central) bank and redeem each of my coins for ONE FULL DOLLAR? If yes, wow, I am going to book a flight to the US of A and ....

Cognitive Dissonance's picture

Technically the Gold and Silver Eagles are legal tender and can be redeemed for their face value in the almighty dollar.

BTW the USA is still looking for a few more good suckers. Positions are still available, but call now because they're going fast. :)