One common criticism of the Federal Reserve’s efforts to stimulate the economy over the last decade is that they have increased inequality. In Fortune, Josh Hammer and Todd Stein reiterate the argument. “Artificially low interest rates,” the critics believe, have inflated asset values, a boon to the rich, while punishing small savers.


I am skeptical of that case, in large part because I think that low interest rates have been “natural” rather than “artificial”: a consequence of a depressed economy. If the Fed had tried to drive rates above their natural level, it would have raised unemployment and suppressed wage growth, to the disproportionate detriment of people at the low end of the income distribution. Even if that tighter-money policy had led to lower inequality, by crashing asset values, it would not have been worth it.

Since you can’t simply deduce the effects of low interest rates on segments of the population, some empirical evidence would be helpful. Did the European Union, which has generally followed a tighter policy over the last decade, get better outcomes for people in the bottom half? Did Australia, which has followed a looser one, get worse ones? A cross-national comparison might not be able to settle the issue, but could shed light on it.