The Fed Papers Not Tapers

Today you already have heard the Federal Reserve has decided not to "taper" its $80 billion monthly treasury and mortgage back securities program.  As a result the stock market shot up 1.22% (S&P 500), the 10 year treasury closes at 2.69%, the dollar mixed against major global currencies and gold rising 4.27% to $1363.40  (http://www.cnbc.com/id/15839121).  The Fed lowered US GDP for the remainder of 2013 and 2014 and unemployment is slowly rising.  With Fed Funds rate at zero, $4 trillion balance sheet at the Fed and $80 billion monthly purchases where does this end? 

The middle class has not truly benefitted from all this printing by the Fed.  Sure unemployment is not at Great Depression levels, asset prices have been maintained or slowly rising, however incomes for middle class Americans has been falling relative to the top 1% of US population.  The purchasing power of middle class Americans is shrinking.  Your nominal house market value is not equal to the real market value of your house adjusted for inflation.  That is the problem, no one can figure out what the real value of their home.  I am guessing once your sell your home and receive cash, how much the cash is able to purchase in terms of goods is the gauge you can tell whether you truly made money on your home.

Who really benefits from all this monetary printing?  I will not use the term quantitative easing because it disguising its real meaning which is printing money.   If one analyzes money flows, it appears the printed money is flowing into stocks, some bonds which is probably the Fed action, commodities, real estate and other assets.  I believe it is mostly going to stocks because the major indices are at all time high except for the Nasdaq.  Guess who owns most of the stock? The top 1%.  It is only logical the top 1% benefits because they own the vast majority of the stock in corporations. 

So why is this money flowing into stocks?  Good question, corporations are highly productive assets which creating and managed assets that produce multiple streams of cash flow.  These cash flows generates profits which contributes to the rise in stock prices.  Corporations issue bonds however since bonds are fixed income securities, the owner of the bond will only receive a fixed rate of cash flow unlike equities where all the profits flow to. 

I don't want to sound I am anti-rich or upper class quite the opposite.  However, any country that prints or produces inflation only the upper class benefits because they own most of the assets.  In a deflationary environment the lower classes benefit more than the rich because their dollars become more valuable.  The rich on the other hand lose value in net worth because their assets such stocks will drop in value.  I didn't do any research on this idea but I am sure they're a ton of white papers out there on the internet that will explain this in more detail.