How the Fed Found Itself at the Heart of America’s Inequality Crisis
By Matt Peterson
Karen Petrou has for decades played the quiet role of consultant and adviser to banks, central banks, and large investors, helping them slash through the confusion of constantly evolving monetary and regulatory policy. It’s a job that prioritizes dispassionate analysis over advocacy. Today, that changes, with the publication of her new book, Engine of Inequality: The Fed and the Future of Wealth in America. “This book is taking that sword and beating it into a plowshare,” Petrou told me. The book, Petrou’s first, charges that the Federal Reserve is at the heart of an inequality crisis that has hollowed out the middle class. She believes the Fed has misunderstood and misdiagnosed the country’s economic malaise. Its interventions to stave off calamity have, ironically, made America more prone to financial crises like 2008 and the one that was narrowly averted in 2020. Low interest rates and other elements of the Fed’s unconventional monetary policy have failed to spur middle-class growth, even as markets roared, leaving the country more unequal than ever.