Why the rich are getting even wealthier
Wealthy people are getting richer quicker, and it's largely because of something that millions of Australians are cheering about.
Record-low interest rates here and overseas are adding rocket fuel to financial markets, lifting asset prices despite the worst health and economic crises in a century.
Our own Reserve Bank has set its official interest rate at 0.1 per cent and has signalled it won't be lifting rates until at least 2023. Other central banks around the world are taking similar approaches.
That's great for home loan customers who are paying much less interest on their mortgages, and crappy for savers and retirees who effectively receive nothing from cash in the bank.
It's also bad for anyone concerned about rising inequality.
A report released last week by Oxfam found Australia's 31 billionaires had increased their combined wealth by $85 billion since the pandemic began and declared the "extreme inequality was particularly shocking".
And an Oxfam global study found the world's 10 richest men had increased their wealth by $500 billion in the same period - more than enough to pay for a COVID-19 vaccine for the entire planet and prevent pandemic-induced poverty.
A key reason for the wealth boost is that interest rates are so low that investors see little point putting money in bank deposits and other assets where financial returns are almost zero.
So there's a tsunami of money flowing into assets delivering higher returns - such as shares and property - which pushes up their prices further and prompts more people to invest. It's why many forecasters predict a big fall ahead for overheated assets such as US technology stocks.
People who manage investments for the rich are seeing a growing problem. Schroders head of equities Martin Conlon told a briefing this month that "inequality will be a big issue many years into the future".
"Governments are going to be under pressure to do something about it because, like it or not, central bank policies are fuelling it, as much as they don't want to admit it," he said.
Mr Conlon said low interest rates were pumping up asset prices, with the biggest benefits going to a small number of rich people whose propensity to spend wasn't big, so governments would have to put more money into the hands of people who would spend it.
Oxfam says governments should make mega-wealthy corporations and individuals "contribute their fair share of tax", but instead they are racing other governments to lower corporate tax rates.
It says governments need to reduce the tax burden on society's poorest.
This already happens to a degree in Australia where a majority of tax is paid by higher income earners and we are among the world's higher-taxing nations.
We also have good welfare safety nets, though some will disagree, but perhaps there needs to be more creative thinking.
The result of letting the rich get richer could be rising social unrest, experts say, and that might make the race riots we saw in the US last year look like a friendly picnic.
Originally published as Why the rich are getting even wealthier