What is the biggest cause of income inequality? Angry protesters like to point the finger at greedy corporate fat cats, but they miss the mechanics of how wealth is actually redistributed. The cause is messed up monetary policy. The culprits are central banks.
Cheap credit is at the root of the world's economic malaise. Using zero interest rates and quantitative easing, central banks have pumped out credit like cholesterol into the arteries of the economy. The aim was to stimulate economic growth. The result has been the opposite.
Manipulating the money supply is a form of price fixing. For decades, central banks have set the price of capital far too low. The result is what economists call malinvestment. Resources flow from wealth-creators to rent-seekers. Wealth moves from the asset poor to the asset rich.
Eventually these central-bank-caused economic imbalances become a full-blown economic crisis. Think I'm exaggerating? Look at the graph (above) from my pamphlet After Osbrown.
Today, people are finally waking up to the consequences of record low interest rates. An unsustainable housing bubble, that prevents young people getting on the housing ladder. An unsustainable pensions shortfall, that left a £2 billion black hole in Tata Steel's employee pension fund. An unsustainable financial system, which keeps broken banks in business and rewards their creditors for failure.
I've drafted a probing amendment to the Bank of England Bill with the people at Positive Money. It calls for a commission to report on the impact of monetary policy on sustainable development and inequality – and make sure we don't make the same mistakes again.
We need monetary policy that promotes long-term economic prosperity for all, not the short-term political gain of Establishment elites. Let's see if the Government agrees.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
Printed by Douglas Carswell of 61 Station Road, Clacton-on-Sea, Essex