Recently, the hedge fund owner and billionaire, Ray Dalio wrote in a report that the Federal Reserve should look closely at how changes in Fed policy affects the bottom 60%, rather than observing the national average. Dalio predicts that if the Fed foolishly focuses on the national average that it would be a "serious mistake" because it would create a brighter economic picture than the actual reality. The difference in financial conditions for the two groups, according to Dalio, will be a major cause of slowing growth. With improvements in technology impacting employment and the government continuing to be challenged by pension and healthcare needs, the gap between the top 40% and bottom 60% will only intensify over the next couple of years.
Some disparities between the two classes are: the top 40% has on average 10 times more wealth than the bottom 60% right now, most of the bottom 60% has no savings, will 70% in the top 40% do. While looking to the future, the Federal Reserve has given itself little room to maneuver if the U.S. market experiences any kind of recession. Dalio believes that they should avoid from tightening monetary policy. Long term, Dalio believes that that debt and non-term debts are very worrying.
https://www.bloomberg.com/news/articles/2017-10-23/dalio-says-fed-should-view-u-s-as-split-into-two-economies
I think focusing on the bottom half of our nation is essential right now in the U.S. By keeping/putting more money into the hands of the lower incomes, consumption will increase and help our economy. The upper half of the country is doing fine (for the most part); the other half needs some attention. We could create some economic growth by showing more care for these people. I agree that the gap is only going to intensify and the time to reform is now.
ReplyDelete