Federal Reserve Policies Accused of Widening Wealth Gap After COVID-19 Pandemic

Economic experts are raising concerns that the Federal Reserve’s monetary policies implemented in the wake of the COVID-19 pandemic have exacerbated income inequality, leading to a disproportionate increase in wealth for the nation’s wealthiest residents. These policies, primarily focused on manipulating interest rates, are argued to have created an environment where borrowing is exceptionally cheap, benefiting those with the means to leverage debt – namely, the wealthy.

Economist Peter St. Onge, in an interview with Fox News Digital, asserted that the Federal Reserve’s actions, rather than free market forces, are the primary driver of income inequality. He challenged the notion that big business and wealthy individuals have faced increasing headwinds from federal regulations and taxes. Instead, he argued that the Fed’s intervention in the monetary system has distorted the economy, favoring those who are already affluent.

St. Onge highlighted data indicating a significant increase in the share of GDP held by billionaires, rising from 14.1% in 2020 to 21.1% in 2025, as reported by Johns Hopkins economist Steve Hanke. This surge in wealth concentration coincides with the Fed’s efforts to keep interest rates low, a policy St. Onge characterized as a "rich man’s game."

JPMorgan Chase’s private bank, as reported by the Wall Street Journal, estimated a substantial increase in the number of billionaires in the U.S., from 1,400 in 2021 to nearly 2,000 as of 2024. This rapid growth in the billionaire population further underscores the widening gap between the ultra-wealthy and the rest of the population.

The Federal Reserve, as the central bank of the United States, operates independently, setting monetary policies and overseeing banks without direct approval from the president or Congress. This independence, while intended to insulate the Fed from political influence, has also drawn criticism regarding its accountability and potential impact on income inequality.

St. Onge explained that the Fed’s manipulation of interest rates below market value effectively subsidizes loans, creating an environment where borrowing is exceptionally attractive for those who can access it. He pointed out that during the COVID-19 pandemic, mortgage rates were significantly lower than inflation rates, effectively paying people to borrow money.

This policy, he argued, disproportionately benefits the wealthy, who tend to hold significantly more debt than the average American. St. Onge cited data showing that the average debt for the top 5% of Americans is approximately $600,000, compared to around $74,000 for the vast majority of Americans – a nine-fold difference. By making loans cheap, the Fed is effectively channeling significantly more money to the wealthy, exacerbating existing wealth disparities.

Furthermore, St. Onge noted that asset ownership is even more skewed, with the top 5% of Americans holding $7.8 million in assets compared to the average American’s $62,000 – a staggering 130-fold difference. Because the value of assets like stocks and houses is heavily influenced by interest rates, lowering rates mechanically increases their value, further enriching those who own them.

He drew a contrast between the economic growth of the 1970s and the early 2000s, noting that while growth slowed in the latter period, asset values skyrocketed. This, he argued, is a direct consequence of the Fed’s aggressive policy of keeping interest rates low, which has inflated asset prices and disproportionately benefited the wealthy who own those assets.

St. Onge emphasized that the Fed’s policies, while not explicitly intended to enrich the wealthy, have that effect as a consequence. He stated that holding long-term interest rates low is essentially "to shower money on rich people and to shower it in proportion to which they’re rich," with billionaires being the most extreme beneficiaries.

Economist Steve Hanke echoed St. Onge’s concerns, highlighting the Fed’s role in fueling income inequality through its monetary policies. Speaking at a conference at the Mises Institute, Hanke pointed to the significant increase in billionaires’ share of GDP, attributing it to the Fed’s expansion of the money supply, which in turn drove up asset prices.

Hanke cited the Fed’s "excessive money printing" during the pandemic as a prime example of this phenomenon. He explained that the transmission mechanism of monetary policy dictates that changes in the money supply are followed by changes in asset prices, real economic activity, and ultimately, the price level. The surge in the US broad money supply during the pandemic, peaking at 18.1% per year in May 2021, led to a corresponding rise in asset prices, with the S&P 500 reaching a local maximum in December 2021.

The result, according to Hanke, was a significant increase in wealth inequality, with billionaires increasing their share of the GDP by 7.6 percentage points in just four years.

St. Onge also suggested that the Fed’s policies have been politically motivated. He expressed a desire for Democrats who campaign on income inequality to recognize the Fed’s role in exacerbating the problem and join the call to "end the Fed."

On the other side of the political spectrum, Vice President JD Vance has criticized the Biden administration and "Wall Street barons" for policies he believes have harmed the working class. Vance has highlighted the affordability crisis facing working-class families and pledged to end economic "catering to Wall Street."

The Federal Reserve Board declined to comment on St. Onge’s and Hanke’s remarks when approached by Fox Digital.

The accusations against the Federal Reserve raise important questions about the impact of monetary policy on income inequality and the distribution of wealth. As the debate over economic policy continues, these concerns are likely to remain at the forefront of the discussion.