Income Inequality, Monetary Policy & The Left

The New York Times reports that income inequality in America rose sharply in 2005, to its highest level since 1928. This was also noted by the leftist Economic Policy Institute.

What is missed is why inequality has increased. Leftists typically blame foreign trade and Bush's tax cuts, while paleoconservatives , in addition to trade, often blame immigration. Yet while there may be some limited truth in these explanations, the perhaps most important explanation is left out. What explanation, you might wonder. Well, ask yourself, what was special about 1928? The answer is that it was the peak of a stock market bubble and strong cyclical boom. Income inequality then fell sharply during the great depression. Similarly, income inequality previously peaked in 1999, at the height of the tech stock bubble, and then fell back in 2001-2003.Only to rise again in 2004-2005. See the pattern here? Income inequality rises during booms and falls during busts, as the prices of assets mainly held by the wealthy rise druing booms and falls during busts.

This is the way it has always been, and it is predictable from a theoretical perspective. Because newly created money tends to affect asset prices before product prices and product prices before wages, monetary driven booms will tend to increase relative income for the wealthy and reduce it for the poor.

So if the left really thinks rising income inequality is so bad, why don't they fight for hard money? In reality, Economic Policy Institute and other leftists typically supports inflationary monetary policy, see for example here.
The idiots at EPI in fact seems to be under the illusion that inflationary monetary policies will reduce income inequality, when basic economic theory and all historic evidence shows that it will increase it.