Growing Inequality In The U.S. Troubling

In a speech last Friday, U.S. Federal Reserve chair Janet Yellen expressed her concerns about the rising inequality in the United States. “I think it is appropriate to ask whether [growing inequality] is compatible with values rooted in our nation’s history,” she said.

However, her speech has not gone down well among some people as they questioned whether she is acting as a mouthpiece for the Obama administration.

Yellen, however, has not been camera shy in voicing her opinion on matters beyond the more prominent role of rate-setting played by ‘fed’ chairs.

“The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression,” she said, noting that while some degree of inequality is to be expected, the recent widening concerns her.

Yellen referenced the “Great Gatsby Curve”, which has found that “among advanced economies, greater income inequality is associated with diminished intergenerational mobility.”

She argued that in order to arrest this trend, emphasis should be placed on four issues: affordable higher education, inheritance policy, business ownership and help for children.

However, she did not connect any of these policies to those of the Fed, which many would question.

The Fed is set to hold a two-day meeting of its rate-setting committee on 28-29 October.