Is wealth inequality an inevitable consequence of the drive to return to full employment?
Today, much more so than in the past, governments and central banks are determined to rapidly get economies back to full employment. This translates into fiscal and monetary policies that are more expansionary during recessions than in the past and that remain expansionary for longer during growth periods. But this economic policy choice (strong fiscal stimulus, very low interest rates, highly abundant liquidity) chronically drives up asset prices and therefore leads to wealth inequality. This begs the question whether the drive to rapidly reduce unemployment - and therefore the income inequality caused by unemployment - has the inevitable consequence of a rise in wealth inequality.