The above is a popular myth which Positive Money seems to have fallen for. See their tweet below. Indeed the myth can be put in more general terms: the fact that ANY policy or policy change increases inequality is not an argument against that policy or policy change.
Let's see how this transpires. Follow along now with the @PositiveMoneyUK team #QE URL: https://t.co/0Q0KZTxFbt pic.twitter.com/DHi7zOlIVk— Positive Money LVRPL (@PosiMoney_LVRPL) September 15, 2016
Reason is that (as explained by the Italian economist and philosopher, Pareto) the only really important question is whether a policy increases GDP (within environment constraints of course). If it does, and specific groups are adversely affected, that’s not a problem. All you have to do is tax those who benefit from the change, and pass the proceeds on to the losers, as Pareto explained. As a result it is possible to arrange for everyone to be better off. Nothing wrong with that, is there?
In the particular case of QE, which Pos Money particularly objects to, there is actually an argument for taking QE much further: that is, there is an argument for turning the entire national debt into base money. Milton Friedman and Warren Mosler argued for that policy.
If Friedman and Mosler are right, and GDP is actually increased by that move, then the fact that QE increases inequalities is irrelevant for the above reasons.
Having said that, I still support Pos Money because I think they are right on a very fundamental issue: the full versus fractional reserve banking argument.