Karen Petrou - Engine of Inequality

19 Index

20 End User License Agreement

1 Chapter 7Table 7.1 Where Households Keep Their Wealth 1983 vs. 2016

2 Chapter 10Table 10.1 Equality-Essential Regulation

3 Chapter 11Table 11.1 Monetary-Policy Tools to Repair the Inequality Engine

1 Chapter 2 Figure 2.1 Diverging Income Inequality: Changes to Income Distribution 1980-... Figure 2.2 Growth in Real Income for Select Income Groups, 1989–2016 Figure 2.3 Growth in Real Wealth for Select Income Groups, 1989–2016

2 Chapter 3Figure 3.1 The Rise and Fall of U.S. Public Wealth, 1945–2015

3 Chapter 6Figure 6.1 Fed Balance Sheet Growth Since 2004Figure 6.2 Top 10% Income Share at its Highest Level in 100 YearsFigure 6.3 21st Century Wealth GrowthFigure 6.4 Trends in Who Has How Much of What When

4 Chapter 8Figure 8.1 Bank Lending Remains Below Pre-Crisis Levels

1 Cover

2 Table of Contents

3 Begin Reading

1 iii

2 iv

3 v

4 xi

5 xiii

6 xv

7 xvi

8 xvii

9 xviii

10 xix

11 xx

12 xxi

13 1

14 2

15 3

16 4

17 5

18 6

19 7

20 8

21 9

22 10

23 11

24 12

25 13

26 14

27 15

28 16

29 17

30 18

31 19

32 20

33 21

34 22

35 23

36 24

37 25

38 26

39 27

40 28

41 29

42 30

43 31

44 32

45 33

46 34

47 35

48 36

49 37

50 38

51 39

52 40

53 41

54 42

55 43

56 44

57 45

58 46

59 47

60 48

61 49

62 50

63 51

64 52

65 53

66 54

67 55

68 56

69 57

70 58

71 59

72 60

73 61

74 62

75 63

76 64

77 65

78 66

79 67

80 68

81 69

82 70

83 71

84 72

85 73

86 74

87 75

88 76

89 77

90 78

91 79

92 80

93 81

94 82

95 83

96 84

97 85

98 86

99 87

100 88

101 89

102 90

103 91

104 92

105 93

106 94

107 95

108 96

109 97

110 98

111 99

112 100

113 101

114 102

115 103

116 104

117 105

118 106

119 107

120 108

121 109

122 110

123 111

124 112

125 113

126 114

127 115

128 116

129 117

130 118

131 119

132 120

133 121

134 122

135 123

136 124

137 125

138 126

139 127

140 128

141 129

142 130

143 131

144 132

145 133

146 134

147 135

148 136

149 137

150 138

151 139

152 140

153 141

154 142

155 143

156 144

157 145

158 146

159 147

160 148

161 149

162 150

163 151

164 152

165 153

166 154

167 155

168 156

169 157

170 158

171 159

172 160

173 161

174 162

175 163

176 164

177 165

178 166

179 167

180 168

181 169

182 170

183 171

184 172

185 173

186 174

187 175

188 176

189 177

190 178

191 179

192 180

193 181

194 182

195 183

196 184

197 185

198 186

199 187

200 188

201 189

202 190

203 191

204 192

205 241

206 242

207 243

208 244

209 245

210 246

211 247

212 248

213 249

214 250

215 251

216 252

217 253

218 254

219 255

220 256

221 257

222 258

223 259

Karen Petrou

Copyright © 2021 by Karen Petrou. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data is Available

ISBN 9781119726746 (Hardcover)

ISBN 9781119727538 (ePDF)

ISBN 9781119730057 (ePub)

Cover Design: Wiley

Cover Image: ©P_Wei/Getty Images

Author Photo: courtesy of the Author

To Basil, whose tireless patience, encouragement, and critical rereading made this book possible along with so much more .

Grateful thanks are extended to Matthew Shaw, whose research helped to ensure that this book is as right as we can make it, and to Arezou Rafikian for her never-ending cheerful willingness to clean up all my typos. Space does not permit thanks also to the many bankers, policy-makers, industry critics, and friends who have read portions of the manuscript and provided both encouragement to be sure this story is told and constructive comments to make sure it's told correctly. Appreciation also to Leah Spiro, my bulldog agent; Bill Falloon, a very helpful editor; Ellen Kadin, who framed key parts of the initial proposal; Barbara Hendricks; and Mark Fortier and his crack advisory team. Finally, a pat on the head for Zuni, my German Shepherd guide dog. Her unflagging and enthusiastic presence got me to and from many meetings, speeches, and drinks with friends that honed my thinking.

Dubbed by the American Banker “the sharpest mind analyzing banking policy today — maybe ever,” Karen Petrouis one of the most sought-after financial consultants in Washington and one of the most influential experts on financial policy and regulation in the world. She is Managing Partner of Federal Financial Analytics, the Washington, DC, financial services consulting firm she co-founded in 1985. It does not lobby for anyone, providing strategic and policy analysis and advisory services to major financial institutions and global central banks. Her views can be found almost every day in the Financial Times, American Banker, Wall Street Journal , NPR, CNBC, and many other media. In addition to testifying before the US Congress, she has spoken before the Federal Reserve Banks of New York, St. Louis, San Francisco, and Chicago; the European Central Bank; the International Monetary Fund; and many other governmental, industry, and academic groups. She also provides strategic guidance to foundations on a pro bono basis in connection with work by her and her husband, Basil, to create new funding instruments to speed biomedical research. Winners of the Visionary Award in 2019 from the Foundation Fighting Blindness for this work, the Petrous live in Washington, DC, with Zuni, a German Shepherd guide dog.