The Missing

The evergreen Mr. Dooley once pointed out (in broad Irish dialect) that even Supreme Court justices read the election returns. Holman Jenkins muses over whether the members of the Federal Reserve’s Open Market Committee do:

Judging by this week’s election, voters didn’t appreciate the irony of Federal Reserve Chair Janet Yellen’s speech a few weeks ago lamenting a rise in “inequality.”

The Federal Reserve’s main ministration for a weak recovery, after all, has been stoking a “wealth effect.” By levitating the stock portfolios of the top 1%, jobs and wage growth for the other 99% would be stimulated. “Higher stock prices will boost consumer wealth and help increase confidence,” once explained ex-Fed chief Ben Bernanke.

It hasn’t worked. The only confidence stimulated has been the confidence of hedge funds that stocks might be a good bet in the short term if central banks are printing money. Still missing is the kind of confidence that would boost the incomes and prospects of people who don’t own stocks for a living. The simplest and most convincing analysis of this secular stagnation is from former Fed Chairman Alan Greenspan, who emphasizes a single datapoint: the missing investment in “long-lived assets” such as homes, buildings and industrial equipment—i.e., assets that require long-term optimism by employers, entrepreneurs and young people starting families.

They might do well to think about another of Mr. Dooley’s sage remarks: “One of the strangest things about life is that the poor, who need the money the most, are the ones that never have it.”