More Benjamins is a good thing.

Photographer: Brendon Thorne/Bloomberg

QE's Shortcomings Show Up in Global Wealth

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
Read More.
a | A

Forget the so-called 1 percent vilified by the likes of the Occupy and Anonymous movements. It turns out that the bulk of the world's wealth is in the hands of just 0.7 percent of the population. And for those who suspect that quantitative easing is more about propping up asset prices than reinvigorating the real economy where things get made and sold, the Credit Suisse Global Wealth Report makes for interesting reading.

Every year the Swiss bank tries to estimate the financial and physical assets of 4.7 billion people, including real estate but minus debts, to produce its report. The latest edition postulates that 34 million people control $112.9 trillion of assets, or 45.2 percent of the world's total riches:

At constant exchange rates, global wealth increased by $13 trillion in the year to mid-2015. And while China's middle class is now bigger than that of the U.S., at 109 million Chinese versus 92 million Americans, the U.S. benefitted the most from the rise in worldwide prosperity to the tune of $4.6 trillion. China's wealth increased by $1.5 trillion, while third-placed U.K. gained $360 billion:

Moreover, Credit Suisse reckons inequality has risen since the 2008 credit crisis, with the growth in middle-class wealth slower than the increase enjoyed at the top of the pyramid:

Our estimates suggest that the lower half of the global population collectively own less than 1 percent of global wealth, while the richest 10 percent of adults own 88 percent of all wealth and the top 1 percent account for half of all assets in the world.

And because those at the top have more of their assets set aside as financial wealth -- equities and other securities -- financial assets have become a bigger part of the global wealth pie since the crisis: 

So what does this mean for monetary policy and the global economy, which in large part depends on consumers staying confident enough to deliver the animal spirits needed for growth? Central banks have pumped $5 trillion into the global economy through their various quantitative easing programs, and yet the world still seems at risk of tumbling back into recession. Here's what the Bank of England had to say about quantitative easing a year ago:

We find no statistically significant evidence from either approach that those banks who received increased deposits from QE lent more, all else equal. Our results do not preclude a bank lending channel, but if the effect were very powerful it seems unlikely there would be no evidence of it in our tests.

While QE hasn't boosted the availability of loans for business to invest in their growth, it has helped goose global equity market values -- which have doubled since the end of 2008 even after a hiccup in the middle of this year:

Source: Bloomberg

So QE has done part of its job, generating asset-price inflation even though retail prices remain stagnant and the threat of deflation remains alive, as the 0.1 percent drop in annual September U.K. consumer prices reported today shows. Without that boost to financial markets and stock prices, who knows how much gloomier the global outlook might be? But as QE's efficacy appears weaker with every new round of stimulus, it's time for governments to do more to resuscitate the non-financial economy.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mark Gilbert at

To contact the editor responsible for this story:
Therese Raphael at