The primary driver of wealth inequality isn't income, but asset ownership. Government money printing to cover deficit spending inflates asset prices. This forces those who understand finance to buy assets, which then appreciate, widening the gap between them and those who don't own assets.

Deficit spending acts as a hidden tax via inflation. This tax disproportionately harms those without assets while benefiting the small percentage of the population owning assets like stocks and real estate. Therefore, supporting deficit spending is an active choice to make the rich richer and the poor poorer.

Excessive debt forces governments to print money, which inflates asset prices. This process mechanically enriches the asset-owning class while devaluing currency for wage earners, hollowing out the middle class into either the wealthy or the poor.

There are two distinct economies operating simultaneously. Those with a capital base (equities, real estate) can use financial engineering and leverage to thrive. Meanwhile, individuals relying solely on wages are being crushed by inflation, as their income fails to keep pace with rising costs.

To fund deficits, the government prints money, causing inflation that devalues cash and wages. This acts as a hidden tax on the poor and middle class. Meanwhile, the wealthy, who own assets like stocks and real estate that appreciate with inflation, are protected and see their wealth grow, widening the economic divide.

The "K-shaped" economy presents a dilemma. The Fed will prioritize easing for the struggling lower end (housing, affordability), even if it risks overheating the asset-owning upper end. Political pressure from the masses outweighs concerns about asset bubbles, guiding policy toward the path of least political resistance.

Governments with massive debt cannot afford to keep interest rates high, as refinancing becomes prohibitively expensive. This forces central banks to lower rates and print money, even when it fuels asset bubbles. The only exits are an unprecedented productivity boom (like from AI) or a devastating economic collapse.

The core problem for the middle class is a direct chain reaction: national debt leads to money printing (inflation), which forces people to own assets to preserve wealth. Since only 10% of Americans own 93% of assets, the rest are left behind with devalued cash and stagnant wages.

By engaging in large-scale asset purchases (QE) for too long, the Federal Reserve inflated asset prices, creating a two-tier economy. This disproportionately benefited existing asset holders while wage earners were left behind, making the Fed a major, albeit unintentional, contributor to wealth inequality.