MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT

Janet Yellen (Photo: International Monetary Fund)

Although the head of the Federal Reserve Board, Janet Yellen, isn't yet calling for systemic change in the US economic system - nor is she likely to - she did no doubt shock the financial barons by acknowledging income inequality in the US in a recent speech.

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In remarks on October 17 to the Federal Reserve Bank of Boston, Yellen, according to Wall Street on Parade, appeared to formally recognize at least some of glaring disparities in distribution of income and assets in the US:

“The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression.” Using data from the Fed’s Survey of Consumer Finances, Yellen punctuated her message with these hair-raising figures:

“The wealthiest 5 percent of American households held 54 percent of all wealth reported in the 1989 survey. Their share rose to 61 percent in 2010 and reached 63 percent in 2013;

“The lower half of households by wealth, held just 3 percent of wealth in 1989 and only 1 percent in 2013. To put that in perspective…the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013.”

“This $11,000 average is 50 percent lower than the average wealth of the lower half of families in 1989, adjusted for inflation.”

The Wall Street Journal took note of Yellen's focus on wealth disparity in an article entitled, "Janet Yellen Decries Widening Income Inequality: Central Bank Chief Says Wealth Disparity Could Be Impeding Economic Mobility." The Journal reported that Yellen remarked, "The extent and continuing increase in income inequality in the United States greatly concerns me."

For a Federal Reserve chief, it was an unprecedented recognition of how lopsided wealth has become in the US. It's refreshing that the head of the national pillar of capitalism - the Federal Reserve Board - drew attention to the damning evidence. It is still elicits a gasp - after all the revelations about the redistribution of wealth upward - to read that "the lower half of households by wealth, held just 3 percent of wealth in 1989 and only 1 percent in 2013."

As welcome as Yellen's remarks are, however, she identifies the problem without advocating aggressive solutions or systemic change in the financial system. It is like documenting that smoking causes multiple health problems - particularly cancer - but not urging a crackdown on the cigarette industry.

As Wall Street on Parade writes of Yellen's income inequality concerns,

Unfortunately, being the head of a Federal Reserve system that relies on goodwill with the big Wall Street firms to carry out its open market operations, Fed Chair Yellen apparently felt it would be impolitic to mention that this vast wealth inequality is coming from an institutionalized wealth transfer machine operated by Wall Street and supervised by a Fed that is regularly reviled for its wussiness when it comes to cracking down on blatant corruption by its charges.

Of course, the consolidation of the nation's financial assets in the hands of relatively few people is caused by more than regulatory failure. To that, we must add decades of tax cuts for the rich, offshore tax avoidance, lowering wages and an oligarchical government - as well as the perpetuation of a capitalist system that is perhaps no longer viable if a vibrant democracy is to be built in this country.

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