Fed Admits Pandemic Policies Supercharged America’s Wealth Divide—Here’s Why Crypto Wins

Central banks finally confess what decentralized finance knew all along: their policies built walls around wealth.

The Admission That Changes Everything

When the money printers roared to life in 2020, they didn't rescue Main Street—they turbocharged asset holders. Real estate, stocks, and traditional investments soared while wages flatlined. The Fed's balance sheet ballooned, but regular bank accounts didn't. That wealth gap wasn't an accident—it was baked into the system.

Why Traditional Finance Fails the Masses

Banking gates stay locked unless you already have keys. Loan approvals, investment minimums, geographic restrictions—they're all designed to keep capital flowing upward. Pandemic relief programs? Mostly captured by those with existing connections and collateral. The system works perfectly for those it was built to serve.

The Decentralized Alternative Already Exists

Bitcoin doesn't check your credit score. Ethereum doesn't care about your zip code. DeFi protocols open their doors 24/7 to anyone with an internet connection. While traditional wealth gates require permission, crypto networks operate on participation. No central committee decides who gets access to compound interest or liquidity pools.

The Cynical Truth Wall Street Won't Say

Of course banks created inequality—their business model depends on it. They profit from the spread between what they pay depositors and what they charge borrowers. Wider gaps mean wider margins. The pandemic just gave them cover to accelerate what they've been doing for decades: concentrating capital while pretending to democratize it.

Where We Go From Here

Admissions don't fix systems. The same institutions that broke wealth distribution now promise to mend it—with more regulations, more controls, more centralized solutions. Meanwhile, permissionless networks keep building parallel financial rails that actually distribute opportunity rather than just talking about it.

The wealth gap isn't a bug in traditional finance—it's the main feature. Crypto isn't perfect, but at least it's honest about being an alternative rather than pretending to be a solution.

How money policy played a part

While the central bank’s decisions contributed to the different outcomes between rich and poor Americans, this was never the intended result.

In 2020, officials were right to drop rates nearly to zero to help an economy damaged by the pandemic. The institution, which Congress directs to aim for full employment and steady prices, faced business closures that were sending joblessness soaring.

Rates stayed extremely low until March 2022, when officials started raising them sharply to fight rising prices. By that time, roughly a quarter of the nation’s approximately 85 million homeowners had secured very low mortgage rates, and only a small number have given up those low rates since.

However, the central bank may have contributed to the K-shaped economy much earlier.

“This is a phenomenon that really started in 2008, with the massive liquidity injections that the Fed did in response to the global financial crisis, which raised stock market values and housing values,” Oren Klachkin, a financial market economist at Nationwide told CNN. “Since then, we’ve seen this persistent gap between the haves and the have nots, which actually narrowed after the pandemic.”

The poorest Americans saw their pay grow quickly from 2020 through 2023, Atlanta branch data shows, moving much faster than pay for the wealthiest workers. Back then, employers were rushing to hire from a small pool of available workers.

That changed this year. In September, the 12-month moving average of middle pay growth for the bottom quarter of households was 3.7%, compared with 4.4% for top earners.

“Those at the bottom don’t have housing values to help them. They don’t have the stock portfolios to help them. And it’s harder for them to tap into potential lines of credit,” Klachkin said. “They mostly depend on their wages to outpace inflation.”

No quick fix available

The central bank’s primary tool, its key rates, which affect borrowing costs throughout the economy, is well known as a crude instrument.

This means it cannot assist particular groups when trying to strengthen or ease pressure on the job market, which officials are currently doing. The institution also doesn’t control long-term rates, which typically follow yields on longer Treasury notes.

Over the past two years, the bank has dropped its benchmark lending rate by 1.75 points to keep the job market stable. Officials hope these cuts will lift everyone together.

The best approach to fix the K-shaped economy may simply be preventing job market decline and hoping other factors boost employment and pay.

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