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There’s definitely an “inequality” problem in the United States.
The middle class and working poor don’t have the same perks and protections that wealthy Americans enjoy.
Resolving this brand of inequality has never been more pressing for politicians and policy makers, which is why some of them are going all out, even out on a limb, offering their fixes.
Most proposed fixes, like a wealth tax, free college tuition, free healthcare for all, are outrageous in their size and scope but resonate with large political and socio-economic constituencies.
If so-called “free stuff” could be paid for equitably, meaning magically, everyone would “vote for free.”
Well, guess what, there’s someone out there offering something like that.
He ran for office once. He might run again, but now he resides at the most powerful, the richest, the most elite institution in the world, and he’s openly pushing an inequality prescription, as nebulous as it is at this time, that could easily catch on like wildfire, precisely because he’s where he can make “free” actually happen.
To a point.
That point, of course, would be the breaking point of everything.
How an Engineer Became a Banker So Involved in the Last Crisis
The man is Neel Tushar Kashkari.
He was born in Akron, Ohio, on July 30, 1973, to hard working, successful immigrant Indian parents.
He earned a bachelor’s and a master’s degree in electrical engineering from the University of Illinois at Urbana-Champaign. He got an MBA from the Wharton School of the University of Pennsylvania in 2002.
The MBA student interned at Goldman Sachs over his two summers at Wharton, then joined Goldman’s San Francisco office, eventually leading Goldman’s information technology security practice.
In 2006 the banker sought a recommendation letter from then Goldman chairman and CEO Hank Paulson for the White House Fellows’ program, which he had become a Regional Finalist for.
He didn’t get accepted but he did impress the Goldman leader, who brought Kashkari along as his aide when he was appointed Secretary of the Treasury in 2006.
Kashkari became Paulson’s right-hand man in March 2008 orchestrating the sale of failed investment bank Bear Stearns to JPMorgan chase for a laughable sum. He was named Assistant Secretary of the Treasury for International Economics and Development in June 2008.
And though his portfolio was supposed to be energy policy, he worked side-by-side with Treasury Secretary Paulson fighting the financial crisis and saving Goldman Sachs in the process.
It was Kashkari who initially sought $1 trillion for TARP (Troubled Asset Relief Program), which was knocked down to $700 million and would become part of a suite of bailout and backstopping programs in the biggest bank rescue operation in history.
After the crisis had passed, Kashkari took some time off from Washington, returning to California where he helped Paulson write his memoirs and contemplated offers.
He took a managing director position at PIMCO (Pacific Investment Management Company), then home of the Bond King, Bill Gross. Kashkari ran the company’s New Investment Initiatives division, becoming global head of equities, moving the fixed-income bond house into equities for the first time. He resigned from PIMCO in January 2013 after the firm’s push into equities proved ill-fated.
He took a year off and in January 2014 announced he was running for the governorship of California. That didn’t pan out, but it taught the candidate how the real world of politics works.
Why He’s Now More Dangerous than Ever
So, where to next for Mr. Kashkari?
Why not the most powerful institution in the world, where the world of insiders includes a host of former Goldmanites and Wall Street sycophants, the Federal Reserve.
Kashkari became President and CEO of the Federal Reserve Bank of Minneapolis on January 1, 2016.
It’s from that lofty post the former Goldmanite, Washington insider, would-be governor of California, and wannabe President of the United States says monetary policy can play the kind of redistributing role once thought to be the preserve of elected officials.
You heard that right. Neel Kashkari believes the Federal Reserve can solve the country’s “inequality” problems by exercising the Fed’s control over monetary policy, which means its control over interest rates, the economy, and markets.
A year into his job at the Fed he started a research initiative called the Opportunity and Inclusive Growth Institute, which sponsors in-house scholarships at the Minneapolis Fed to promote the study of economic inequality issues throughout the Federal Reserve System.
His intention, he said, was to generate research that might inform lawmakers’ decisions, rather than the Fed’s. In other words, help direct policy makers outside the Fed toward potential solutions.
In an interview just two months ago Kashkari said, “We had historically said: distributional outcomes, monetary policy has no role to play, that was kind of the standard view at the Fed, and I came in assuming that. I now think that’s wrong.”
What’s wrong is the Federal Reserve, the ultimate “maker” of American inequality, using its power to fix what it created.
Kashkari’s institute is a Trojan horse, a vehicle of his ambition aimed at transforming the political debate about inequality into a Federal Reserve “mandate.”
So does anyone out there think the Fed is the answer to the inequality it fosters every day?
Am I crazy?