William Alston has an article on LRC today about the Fed's redistributionary effect.
http://www.lewrockwell.com/alston/alston52.html
I completely understand the concept of the Fed's redistribution, but I'm a little confused about one of the charts.
In constant dollars, wouldn't an increase in one quintiles pay require a decrease in another? But the first 4 quintiles have slight increases at the same time that the top two quintiles increase. How can all quintiles increase in real terms?
Trianglechoke7:How can all quintiles increase in real terms?
I think here's your problem this graph depict nominal wages, not real wages.
I just read the article now and from what I can see says that at 1980 there is a transfer of real wealth from the poorest quintiles to the richest. Even after 1980 the blue line and the pink line increases very very slightly (at least as far as I can see), this seems to suggest if he is correct in saying that there was an transfer of real wealth after 1980 and yet this graph shows an increase in wages after 1980, it can only be in nominal wages.
I'm probably wrong though.
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
The chart, according to the article, is in 2003 dollars.
Is it possible that using the CPI makes all the wages go up if the CPI underestmates inflation?