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The first book to reveal how the Federal Reserve holds the key to making us more economically equal, written by an author with unparalleled expertise in the real world of financial policy

Following the 2008 financial crisis, the Federal Reserve’s monetary policy placed much greater focus on stabilizing the market than on helping struggling Americans. As a result, the richest Americans got a lot richer while the middle class shrank and economic and wealth inequality skyrocketed. In Engine of Inequality, Karen Petrou offers pragmatic solutions for creating more inclusive monetary policy and equality-enhancing financial regulation as quickly and painlessly as possible.

Karen Petrou is a leading financial-policy analyst and consultant with unrivaled knowledge of what drives the decisions of federal officials and how big banks respond to financial policy in the real world. Instead of proposing legislation that would never pass Congress, the author provides an insider's look at politically plausible, high-impact financial policy fixes that will radically shift the equality balance. Offering an innovative, powerful, and highly practical solution for immediately turning around the enormous nationwide problem of economic inequality, this groundbreaking book:

  • Presents practical ways America can and should tackle economic inequality with fast-acting results
  • Provides revealing examples of exactly how bad economic inequality in America has become no matter how hard we all work
  • Demonstrates that increasing inequality is disastrous for long-term economic growth, political action, and even personal happiness
  • Explains why your bank's interest rates are still only a fraction of what they were even though the rich are getting richer than ever, faster than ever
  • Reveals the dangers of FinTech and BigTech companies taking over banking
  • Shows how Facebook wants to control even the dollars in your wallet
  • Discusses who shares the blame for our economic inequality, including the Fed, regulators, Congress, and even economists

Engine of Inequality: The Fed and the Future of Wealth in America should be required reading for leaders, policymakers, regulators, media professionals, and all Americans wanting to ensure that the nation’s financial policy will be a force for promoting economic equality.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Acknowledgments
  6. About the Author
  7. Introduction
    1. Notes
  8. Chapter 1: Inequality: Why It's So Much Worse and What to Do About It
    1. What We Know about Inequality that Economists Don't
    2. The Economic-Recovery Mirage
    3. Why So Unequal So Fast?
    4. Regulatory Wreckage
    5. How to Fix Financial Policy
    6. Notes
  9. Chapter 2: How Unequal Are We?
    1. Economic Inequality Fundamentals
    2. Who Has How Much
    3. What of Wealth?
    4. The Inequality Engine
    5. Worse Than That
    6. The Most Inclusive Ever?
    7. The Great Financial Crisis and Its Equality Aftermath
    8. Notes
  10. Chapter 3: What Makes Us So Unequal
    1. The Mechanical Engineering of Economic Inequality
    2. Death and Taxes
    3. The Role of Transfer Payments
    4. A Supply-Side Solution?
    5. Public Wealth: A Sputtering Part in the Equality Engine
    6. Is Education the Answer?
    7. Is Trade Policy a Problem?
    8. Global Policy Reform?
    9. What to Do?
    10. Notes
  11. Chapter 4: Why Does Economic Inequality Matter So Much?
    1. Inequality and Mortality
    2. Political Polarization
    3. Inequality's Eviscerating Cost
    4. Inequality and the Long Recession
    5. Financial-Crisis Risk
    6. Notes
  12. Chapter 5: Following the Money
    1. How Central Banks Work
    2. The Modern Monetary-Policy Construct
    3. The Fed's Bailout Buckets
    4. The Fed's Payment Powers
    5. Rules of the Financial Road
    6. Four Fundamental Financial-Policy Flaws
    7. Notes
  13. Chapter 6: How Monetary Policy Made Most of Us Poorer
    1. The Fed's Heavy Hand
    2. Why It's the Fed's Fault
    3. How Ultra-Low Interest Rates Made America Still Less Equal and QE Still More Inequitable
    4. The High Cost of Low-Rate Debt
    5. The Low-Unemployment Myth
    6. The Anti-Wealth Effect
    7. Making Matters Still Worse
    8. A Bigger Fed, Lower Rates, an Extreme Financial Crisis
    9. Notes
  14. Chapter 7: How to Make Monetary Policy Make Us More Equal
    1. The Aggregate-Data Error
    2. The Fed's Real Mandate
    3. The Fourth Mandate
    4. The Fed's Giant Faucet
    5. Possible Solutions
    6. Slowing the Inequality Engine
    7. Notes
  15. Chapter 8: Reckoning with Regulation
    1. Consumer Finance Before the Crash
    2. Are Debtors Just Deadbeats?
    3. Are Banks to Blame?
    4. The Businesses Banks Left Behind
    5. Other Precursors of the Crash That Came
    6. Capitalism and Capital Regulation
    7. A Capital Cure
    8. Going with the Flow
    9. Death without Destruction
    10. The Consumer-Protection Quagmire
    11. An Unreadable Rulebook Thrown Only at Banks
    12. The Bleak Outlook and a Better Future
    13. Notes
  16. Chapter 9: Remaking Money
    1. What Money Is and Will Be
    2. The Great Unequalizer
    3. Turning Money into Data
    4. What Makes Money Good Money
    5. Crafting a Good Digital Dollar
    6. How Money Moves
    7. The Central-Bank Solution
    8. Notes
  17. Chapter 10: Rules to Equitably Live By
    1. Why Not Just Deregulate?
    2. Learning to Love Like-Kind Rules
    3. The Specifics of Symmetric Regulation
    4. Raising Up the Regulatory Playing Field
    5. Building a New, Equality-Focused Banking System
    6. Banking While Mailing
    7. Establishing Equality Banks
    8. New Money for a New Mission
    9. Notes
  18. Chapter 11: Financial Policy for an Equitable Future
    1. Turning the Fed into a Force for Good
    2. The Fed's Failings
    3. The Fed's Equality Toolkit
    4. The First Fix: Understanding America as It Is
    5. The Second Fix: Set an Equality Plan and Say So
    6. The Third Fix: A Far Smaller Fed Portfolio
    7. The Fourth Fix: Normal, Moderate Interest Rates
    8. The Final Fix: Ensuring Financial Stability
    9. Ending the Doom Loop
    10. The Future of Equitable Finance
    11. Notes
  19. Index
  20. End User License Agreement
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