Analysis: Interest Rate Cut Will Exacerbate Historic Wealth Disparity, Asset Holders Will Outrun Inflation

BlockBeats News, August 24th, The Kobeissi Letter released its latest market analysis, stating that the expected rate cut will not be as aggressive as Trump hopes, at 300 basis points. The last time the Fed cut rates due to rising inflation was in the 1970s, resulting in a continued historic widening of the wealth gap. In 1990, the wealth gap between the richest 1% and the poorest 50% of the population was $3 trillion, now it is $40 trillion. Currently, the wealthiest 0.1% of the US population holds wealth 5.5 times that of the poorest 50%.

In fact, the Fed has indeed "lagged behind" in the current global rate-cutting cycle. Central banks around the world cut rates 15 times in May alone, the fastest monthly rate cut pace so far this year, and one of the largest rate-cutting waves of this century, firmly establishing that the Fed's first rate cut will come just one month after in 2025. Furthermore, Fed Chairman Powell has 8 months left in his term, and President Trump has made it clear that the new Fed chairman he selects must cut rates, and will "soon" announce his pick for the new Fed chair. 2026 will be a historic year for the market. In fact, this trend is not new, the pandemic only accelerated its development, with asset holders winning the battle against inflation. The richest 1% of American families own 51% of stocks, the richest 10% of families own 87% of stocks. Before the wealth gap widens, market participants should hold more assets.