stepping up to the plate wednesday., page-9

The Fed released an interesting survey recently showing the wealth of middle income Americans dropped 38% from 2007 to 2010, and median income fell 7.7%, while the top 10% saw their wealth actually increase. This shows who the true beneficiaries of Fed actions have been. While in theory lower interest rates are good for all, in practice a wealthy investor will have no trouble borrowing as much cheap money as they want, which they can then use to bid up the oil price (for example). On the other hand it is still extremely difficult for someone with negative equity in their home to refinance, whatever the rate supposedly available. At the same time the proportion of Americans who own shares has been steadily dropping, so the wealth effect from higher equity prices is reduced.

The way the Fed might best help the real economy (IMO) is to do nothing and allow the oil price to drop, ironically bond yields would likely drop too. A data point out tonight may show that lower oil prices have led to stronger retail sales. Will the Fed be prepared to risk genuine "green shoots" for another round of QE with unpredictable side effects? That's not a rhetorical question, quite possibly they would.