Economics/Class Relations

Interview: Christopher Leonard, Author of “The Lords of Easy Money”

The Fed has “wrenched this gap between the very rich and everybody else, which is the defining economic dysfunction of our time.”

Author Christopher Leonard

 

Check the site momentarily for the accompanying review of “The Lords of Easy Money.”

There’s an illuminating scene in Christopher Leonard’s The Lords of Easy Money that talks about the difficulty of trying to communicate the intricacies of Fed policy to mass audiences. Fox News host Glenn Beck, a trusted voice of the Tea Party movement and therefore someone who would have been expected to take an interest in the Fed’s plans for a massive intervention in the economy via the quantitative easing program, took on the subject in a free-flowing broadcast. Leonard describes what ensued:

Beck scrawled a long numeral on a chalkboard: 600,000,000,000. This represented the value of bonds the Fed just announced it would buy. “This is what they call quantitative easing,” Beck said. Then he walked to a new chalkboard with a confusing flowchart written across it that included a series of large, cartoonish arrows that seemed to signify the flow of money, or influence, or something like that, behind the Fed’s new program. Confusingly, the whole thing began with organized labor, depicted by a union boss wearing a bowler’s cap and with a cigar dangling from his mouth. It got weirder and increasingly inaccurate from there. The final cartoon on the flowchart showed a group of top-hat-wearing bankers…

Leonard described Beck’s understanding of the Fed as “like that of a very high drug user who had sat in a motel room, trying to eavesdrop through the wall while people talked about central banking.” I remember the broadcast – though I wasn’t a fan of Beck’s and occasionally wondered if his chalkboard theories about Obama as both Hitler and Stalin were really a brilliant parody I was too thick to grasp, I thought he was at least trying to say something critical about a truly dangerous Fed policy.

As Leonard notes, Beck got one important thing right, that the flood of cheap money punished ordinary savers, but the rest his presentation was so far-out, and over-focused on the idea that QE risked Weimar-style hyperinflation, that his audience probably ended up with a net minus from a knowledge perspective.

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