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How Fed policies may be exacerbating income inequality

The Federal Reserve announced on Wednesday that it would keep interest rates at their current level. Leadership from the big banks is unhappy with this decision since the rates may keep many businesses and Americans from taking out loans and may not fight inflation the way the Fed thinks it will. But should that be the only concern of banks and the Fed? Authors Bethany McLean and Dr. Nomi Prins join Yahoo Finance to discuss why the Fed's policies have really only benefited those at the top despite leadership signaling they are concerned with lower-income Americans. McLean, author of the NYT bestseller The Big Fail, elaborates on how Fed policy hurts lower-income Americans: "We have this weird system with Fed policy, which the Fed is deeply concerned about income inequality and those at the bottom end of the spectrum, but Fed policy nonetheless seems to further the very divides that are so problematic." "There's a ton of consumer debt that is at a record. Credit card debt over a trillion [dollars], total household debt over $17 trillion," Dr. Prins, author of Permanent Distortion: How The Financial Markets Abandoned The Real Economy Forever, echoes McLean's point. "All of that debt costs money and what JPMorgan does by consolidating a lot of those loans into itself because it's grown so large, is it effectively is taking money more from these Fed rate hikes by virtue of having all of those loans in it's purview from the American consumer..." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.


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Dimon on the Fed, inflation, and the consumer: YF Exclusive

In an exclusive interview, JPMorgan Chase CEO Jamie Dimon (JPM) speaks with Yahoo Finance Executive Editor Brian Sozzi from the Chase for Business "Make Your Move Summit" in Texas. Dimon first weighed in on the Federal Reserve's decision to keep its rate hiking cycle on pause. "I think they did the right thing to raise rates rapidly and I think they are kind of right to pause here a little bit and see what happens. But I suspect that they might not be done," Dimon said, adding that "there's a chance inflation is a little bit stickier than people think." When it comes to the consumer, Dimon thinks they are in "rather good shape" given low unemployment and high home equity values. Dimon cautioned, however, that lower-income consumers have spent the excess savings they built up during the pandemic. "The middle class is getting close to zero, no excess savings," Dimon said, "but they still have jobs and wages are going up." Dimon thinks there may be a "sea change" in the economy, noting factors like government spending and an aging population. Dimon said of the future: "I don't see anything which is...disinflationary." Dimon also had strong words for leaders in Washington. "D.C. goes out of its way to make it hard...for small to large businesses to grow and expand," Dimon said. "Some of our regulations are, they're barnacles. They've been there for years. They should be taken away because they're just slowing down growth. I mean, I'm in favor of good regulations, just not endless regulations." Dimon added that geopolitical concerns such as the Israel-Hamas war and Russia's invasion of Ukraine remain top of mind, advising the average investor to keep things like that in mind, saying "look at a potential range of outcomes and...how you feel about if those range of outcomes happened, so you've really thought it through." Key video moments 00:00:45 Dimon on the Fed's path 00:03:50 Dimon’s take on housing 00:06:30 Dimon on the "sea change" in the economy and higher for longer rates 00:08:30 Dimon on the deficit 00:10:00 Dimon on lending to businesses 00:11:50 Dimon describes the state of the U.S. consumer 00:13:00 How Dimon feels about the U.S. government 00:16:30 Dimon on his biggest concerns, geopolitical events 00:19:50 Dimon on why he's hopeful for America 00:21:45 Dimon's message for small businesses


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