The K-Shaped Economy Is Not a Recovery Story. It's a Heist Story.

In March 2020, the stock market crashed 34% in 33 days. The fastest crash in history. Millions of people watched their retirement accounts evaporate in real time. By August 2020, the market had fully recovered.

22 million Americans were still unemployed.

One group went up. One group went down. Draw it out and it looks like the letter K.

They called it the K-shaped recovery. What they did not say out loud is that the K was manufactured.

What the Fed Actually Did

When COVID hit, the Federal Reserve moved fast. Rates cut to zero within days. Asset purchases at $120 billion per month. Corporate bond buying began for the first time in the Fed's 107-year history.

The Fed injected $4 trillion into financial markets over 2 years. Asset prices went up. Dramatically.

If you owned assets, your net worth increased while you sat at home. If you did not own assets, you got a $1,200 check, a temporary unemployment boost, and a lot of press releases about how the government had your back.

The $1,200 was a one-time payment. The $4 trillion went into markets permanently.

They Knew Exactly What Would Happen

This is not a conspiracy theory. The relationship between loose monetary policy and asset price inflation is not disputed. Every Fed official, every economist, every Treasury secretary knows that buying assets pushes up the price of stocks and real estate.

They knew this in 2008, when they did the same thing. The result then was a decade-long bull market that massively enriched asset owners while wages stagnated for everyone else. They did it again in 2020. Same mechanism. Larger scale.

Billionaire wealth grew by $1.3 trillion in the first 6 months of COVID. The top one percent of Americans own roughly 54% of all stocks. The bottom 50 percent own about 1%.

The policy was not designed for them.

The Conflict of Interest Nobody Talked About

When the Fed launched its corporate bond-buying program, it hired BlackRock to help manage the purchases. BlackRock...the largest asset manager in the world, was brought in to help determine how the government would prop up markets.

Markets in which BlackRock has trillions of dollars of interest.

No conflict of interest was found. No one went to jail. The arrangement was disclosed in a footnote.

Was It an Accident?

The people making these decisions are not wage earners. Jerome Powell has a net worth estimated in the 10's of millions. The board members, Treasury officials, and financial institutions consulted during the crisis all sit at the top of the K.

Every policy has winners and losers. The choice to flood asset markets rather than direct sustained relief to workers was a choice. The choice to let corporate bond markets receive open-ended government support while enhanced unemployment benefits expired in 2021 was a choice.

Each choice can be defended on technical grounds. Taken together, they form a pattern. The pattern moved money up.

Call it structural. Call it ideological. Call it the natural result of letting the people who benefit from asset inflation design the response to a crisis.

By 2022 inflation hit. The Fed's solution was to raise rates aggressively. This cooled prices. It also made mortgages unaffordable for first-time buyers and put pressure on small businesses that had borrowed to survive.

The people who locked in low-rate mortgages in 2020 and 2021 were fine. The people who waited, who could not afford the inflated prices, who were still trying to get in, got priced out permanently.

The K got wider.

A Heist Does Not Require a Villain in a Mask

It requires beneficiaries, a mechanism, and a result. All three are documented. The beneficiaries are at the top of the wealth distribution. The mechanism was monetary policy deployed at unprecedented scale with known effects.

The result was the largest wealth transfer in modern American history, accomplished with no legislation, no public debate, and no accountability.

The people who designed it called it stimulus. The people on the bottom line of the K called it something else.

Stay Frustrated.