Sen. Bernie Sanders of Vermont, in a telling exchange with Yellen on Wednesday, wondered: "Are we still a capitalist democracy or have we gone over into an oligarchic form of society in which incredible economic and political power now rests with the billionaire class?"
What was surprising was Yellen's response:
"I don't know what to call our system or how to — I prefer not to give labels; but there's no question that we've had a trend toward growing inequality and I personally find it (to be a) very worrisome (trend) that deserves the attention of policymakers."
Read More At Investor's Business Daily: http://news.investors.com/ibd-editorials/050814-700178-yellen-hesitates-to-say-whether-us-is-capitalist-or-oligarchic.htm#ixzz31Jsfwtpb
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This is one amazing comment from the Fed chairman. There have been some recent books discussing the relationship between government and banking which explores the fact that the banking system could not effectively exist without a close association with government, but the views in the chairman's comments should cause everyone to sit up and take notice.
What kind of economy do we have versus what kind should we have? Is more regulation going to make us more capitalist? Is less going to get us there? Or, do we need a more thoughtful view on what is the purpose and role of regulation? Certainly, using monetary policy to increase the profitability of banks as the key driver for higher growth is not going to generate the intended result. The central bank policy of trying to generate a wealth effect is not a direction for income equality or more competition. The idea of continuing an environment of "too big to fail" is not what should be expected from a capitalist eocnomy.
This is an imporatn question with a non-answer which should leave all of us asking what is going on the economy and with government officials.
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