{slideshow} Interest in income, financial wealth and consumption inequality has increased in the last decade. • Can monetary policy be conducted in a way that benefits all households even in a world of substantial heterogeneity? • The answer in this paper is “yes.” • We construct a stylized economy with considerable wealth, income and consumption inequality. • The role of monetary policy in this model is to make sure private credit markets are working correctly (i.e., complete). • Optimal monetary policy in this model looks like “nominal GDP targeting”—that is, countercyclical price-level movements. • This result ... (full story)