It has been a good week for billionaires.
The UBS/PwC Billionaires Report 2017 claimed the combined wealth of the world’s 1,542 billionaires rose by almost a fifth last year to $6tn: more than double the UK’s gross domestic product.
It has not been a particularly good week for governments.
They have to deal with the fallout from rising wealth inequality, and that fallout is getting increasingly nasty.
This kind of report does not do much for central bankers, either.
The rise of the billionaires is as much about financial globalisation as it is easy money, but every time a report lands on their desks, central bankers must stop to think about the economic, social and political havoc their policies have caused over the past 10 years.
The desperate attempt to avoid deflation via quantitative easing and record-low interest rates has had horrible side effects . . .
- The rich have become much richer;
- corporate wealth has become more concentrated;
- soaring house prices have created intergenerational strife;
- low yields have made all but the super-rich paranoid that they will be entirely unable to finance their futures.
- Most markets have ended up overvalued (overvalued stock has a price not justified by its earningsoutlook or price/earnings ratio) – later, this will really matter.
This, while pension fund deficits and a constant sense of crisis have discouraged capital investment — and have possibly held down wages in the UK.