NEW YORK (ETF Expert) -- The rich have never been so wealthy. The reason? People with money own price-appreciating, income-producing stocks that continue to register all-time highs.
Meanwhile, their property values are recovering and, in some cases, they have acquired more price-appreciating, income-producing real estate during the Great Recession.
Yet, here's the thing. Very little of the U.S. Federal Reserve's electronic money printing (quantitative easing) has benefited small sole proprietors and individual consumers. Whereas big businesses found it easy to refinance their debts to improve their balance sheets, and while people like myself encountered no troubles on route to borrowing at unbelievably low interest rates to buy more stocks and real estate, "Mom-N-Pop Business" and "Average Joe Consumer" did not reap much in the way of rewards.
Many people will say, "Gary, you're crazy. The U.S. economy is clearly improving. Just examine the downward trend in unemployment, now at a five-year low with 7% unemployment! Just look at consumer confidence according to the University of Michigan's sentiment survey to see that is at the highest point in five months!"
To those who only view half of the portrait, I remind them that actual employment via labor force participation is near a 35-year low and the Conference Board's Consumer Confidence Index has been on a steady decline since June.
So for some readers, we can simply agree to disagree, right? Well, not exactly. The primary proof of income disparity as well as the extreme side effects of central bank rate manipulation is its failure to rein in the threat of recession-inducing deflation. While we can debate the efficacy of inflation indicators such as the Consumer Price Index, the fact remains U.S inflation resides at less than 1% year over year and has been declining steadily.
Meanwhile, Europe's latest consumer price reading logged an appalling four-year low of 0.7%, with Spain at a paltry 0.1% and Germany at an exceptionally modest 1.2%. In sum, roughly 18 of 27 inflation-targeting central banks are well below their stated goals of price stability a la 2% inflation.
Perhaps the reader is persuaded that, in spite of unprecedented global monetary accommodation via rate cuts and various forms of QE, prices are still falling. Perhaps the main follow-up question might be, "Why in the sky would falling prices be anything but wonderful for everyone?"