How The Fed's Inflation Policies Crucify Workers In Pictures

Inflation-adjusted charts show the situation is even worse.

“Real” Year-Over-Year Percentage Increases

The chart shows “real” inflation-adjusted median wages declined in 2007, 2009, 2011, 2012, 2013, 2014, and 2015.

Mean inflation-adjusted wages declined “only” in 2007, 2009, 2011, 2012, and 2013.

Disturbing Results

Congratulations to the top ten percent whose real wages rose 8 times in 11 years. At the 75th percentile level, the score is 6-5.

It’s simply too bad for the median and bottom twenty-five percent whose real wages fell seven times in 11 years.

Don’t Blame Corporations

Many blame “greedy” corporations for wage stagnation.

Corporations have a responsibility to do what is best for shareholders, not employees. Sometimes those interests align and sometimes they don’t.

Don’t Blame Minimum Wage Laws

Minimum wages are also not the problem.

There is no reason to expect minimum wages to keep up with home prices. Home prices are not even in the CPI.

The Fed ignored rising home prices from 2003-2006 and they did it again recently. Central banks fail to learn from past mistakes.

Asset prices are in another massive bubble with plenty of blame to share.

Blame the Fed, Congress, Nixon

  1. Blame Nixon for closing the gold window in 1972 that allowed Congressional deficit spending at will.
  2. Blame the Fed for insisting on 2% inflation in a technological price-deflationary world.
  3. Blame Congress for massive fiscal deficits every year.

Price Deflation Not a Problem

The Fed desperately seeks more inflation but a BIS Study on the Historical Costs of Deflation shows routine price deflation is not a problem.

According to the BIS, “Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive.”

Counterproductive Fed Policy

The Fed’s policies are extremely counterproductive. To produce 2% inflation in a price-deflationary world, the Fed helped inflate asset prices to the extremes seen in 2007, 2000, and 1929.

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Dean Gilmore 3 years ago Member's comment

I don't believe the Fed can create wealth.

Duanne Johnson 3 years ago Member's comment

The fed is all about protecting the banks and nothing else. Worker's wages suffer as a result.

Alexa Graham 3 years ago Member's comment

Is that the job of the #Fed?

Texan Hunter 3 years ago Member's comment

These images say it all.

Old Time Investor 3 years ago Member's comment

What do you suppose would have happened had Nixon not closed the gold window in '72?