The Correlation Between U.S. Money Printing & Wealth Creation

Feb 21, 2024 | Finconomics 101, No Bull Economics

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Are the super-rich creating wealth or are they simply riding the wave of money creation? The following chart reveals an incredibly tight correlation between money supply and the net worth held by the top 0.1% richest…  

Comments

  • During times of economic crisis, the Fed’s challenge is to get newly printed money into the hands of spending consumers who can drive growth.
  • Instead, the chart below reveals how the Fed’s printing presses end up inflating financial assets (stocks, bonds & real estate) which are primarily owned by those who are already rich.
  • As the new money (M2) simply flows into the portfolios of the super-rich without making its way into the economy, this simply acts to drive an increase in the wealth disparity between the rich & poor without driving economic growth.
  • While many will argue that the Fed should not be printing money at all, there clearly must be a better way for the central bank to use its printing presses to help during times of trouble without creating asset bubbles that almost exclusively benefit those who need it least.       

Top 0.1% Net Worth & M2 Supply Graph

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