If you have followed any economic news at all you will have heard the term quantitative easing, or QE, which is technocratic shorthand for the Federal Reserve shoveling funds into Wall Street banks to produce a phenomenon known as the “wealth effect.” The wealth effect relies principally on trickery. The hope being that people will see higher asset prices, and in a self-fulfilling prophecy, invest and produce more thinking the economy is better – which will make the economy better. So endeth the theory.

The reality is the Federal Reserve’s QE program has made the rich a lot richer and done little to nothing for the poor and middle class – besides screwing people living on fixed incomes. In fact, it has now devolved into a redistribution scheme to take money from poor and middle class workers and give it to the rich – or so says billionaire investor Stanley Druckenmiller.

In an interview with CNBC related to Fed Chairman Bernanke’s massive cave to Wall Street earlier this week where he refused to stop QE, Druckenmiller revealed what every financially literate American knows – that QE is socialism for the rich.

Andrew Ross Sorkin, CNBC: Yesterday, and it looks like today, the market will be up. Clearly up. Should bad news be bad news – is this just a short term pop?

Stanley Druckenmiller: No, it’s not a short term pop. First of all, as a practitioner of markets I love this stuff. OK, this is fantastic. It’s fantastic for every rich person. This is the biggest redistribution of wealth from the middle class and the poor to the rich ever. Who owns assets? The rich. The billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday. OK?

Druckenmiller hit the nail on the head. QE and any program that relies on the wealth effect is, in truth, a redistribution of wealth from the lower classes to the rich because the rich are the ones who own the assets that are being inflated. The consequences of the spending however are borne by the lower classes who not only by definition don’t own many assets but are forced to deal with higher food and fuel prices the resulting inflation can cause while also getting zero return on any of their small savings due to low or zero interest rates. QE is socialism for the rich and even the 1% are admitting it. Game. Set. Match.

By the way, this also helps explain the historic inequality that corporate economists seem/pretend to be so mystified by. Why is there such a gap between the haves and the have-nots? Probably because the Federal Reserve is pumping up assets for the haves to the tune of $85 billion, a month.

So surprise surprise the stock market, income inequality, and poverty are at historic highs at the same time. Actually don’t be surprised, it is a direct and completely predictable result of the Federal Reserve’s policy of socialism for the rich, capitalism for the poor.