Federal Reserve Chair Janet Yellen has devoted time of late to discussing the significant problem of inequality. At a conference on April 2^nd, Ms. Yellen urged that research be undertaken “to understand whether any policies may hold people back or discourage upward mobility.” Perhaps such research might start at the doorstep of the Federal Reserve because the Fed’s sustained policy of near-zero interest rates has increased inequality, as well as made it more difficult for the middle class to climb the economic ladder.

The crux of recent Fed policy hinges on a simple premise: Very low interest rates inflate the value of financial assets like stocks. When interest rates approach zero on ‘safe’ assets, investors must look elsewhere in search of returns. For example, many Americans living on fixed incomes can no longer afford to hold their money in savings accounts or CDs. Instead, for potential gains, they are forced to look to riskier assets like stocks.