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While America’s losses mount, huge gains for top 1%

DMSB Professor Joseph Giglio talks about rising economic disparity in America with the patriot ledger.



By: The Patriot Ledger

October 5, 2013

The economy is not righting itself as quickly or steadily as the Federal Reserve thought it might, so it is buying more bonds. This tactic, known as "quantitative easing" is a way of injecting money into the economy according to Joseph Giglio, finance and strategy professor at Northeastern's D'Amore-McKim School of Business in Boston. Essentially, quantitative easing keeps interest rates low, and the hope is that it will allow businesses and households to spend money as a result. However, it does not seem to be working. "Prolonged low interest rates and an abundant money supply have punished savers and retirees. Their money has generated little return, which forces them into high-risk investments to try and keep up with inflation. The younger generation hurt by high unemployment are not increasing their consumption to make up for the decline in spending among older Americans. And as middle America struggles with rising food and gas prices, weighted down by high unemployment and stagnant wages, the gap between the wealthy and everyone else is growing," says Giglio.