What is the major reason for the growing income inequality in New Jersey and around the country? My letler to the Record published July 31 answers that question.
Regarding “Gap between rich and poor grows wider” (Page A-3, July 29): There is no mystery why income inequality has widened in the past few decades: The Federal Reserve has the power to create money, better known as inflation or easy money, and the supply of money has increased by trillions of dollars for more than three decades.
As economist Ludwig von Mises explained, “Inflation and credit expansion, the preferred methods of present-day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.”
In other words, creating money drives up the prices of financial assets, real estate and prices of goods and services in general. Insofar as the owners of real assets and large businesses are the primary beneficiaries of easy money, their wealth and incomes will increase first and faster than the average worker.
There is only one way to stop the redistribution of income and wealth from low- and middle-income families to the wealthy, and that is to end the Federal Reserve’s ability to create money out of thin air.
Fort Lee, July 30
The writer, a professor of finance at Ramapo College of New Jersey in Mahwah, has been a candidate for statewide office on both the Republican and Libertarian Party lines.