The Federal Reserve is a hundred years old this year. There’s not a whole lot to celebrate in its century long history–the intention might have been good, but the execution has kind of been disastrous. In tonight’s film, Money for Nothing: Inside the Federal Reserve, our guest, Producer/Director Jim Bruce, takes us through the history of the Federal Reserve System and into the current mess.
The Fed is the Central Banking System in the United States, originally founded in response to banking “panics”. The dollar at this time was based on the gold standard. After World War I, the United States was in a much stronger economic position than Great Britain and Europe, and by the 1920s the Fed realized that by adjusting the interest rates, it could macro-manage the economy.
Boom! The Fed lowered the interest rates and people, corporations and institutions borrowed beyond their means. Then the bubble burst. The stock market crashed, the Dust Bowl struck and America was in the midst of the Great Depression. In 1933 the gold standard was dropped, and in 1944 world currencies were tied to the dollar.
The ensuing years saw a slow rise in inflation as we fought an expensive war in Vietnam and tried to end poverty at home. The Fed was making more dollars available, interest rates were increasing and Gerald Ford asked us all to Whip Inflation Now. Ronald Reagan appointed Alan Greenspan to the head the Fed, a position he held for nearly 20 years.
Greenspan, as a former vice-chair under him claims,
wanted to be liked
and was viewed by many as a God. Under Greenspan the United States experienced Black Monday in 1987, the dotcom boom and bust, the economic problems post-9/11, and the housing bubble, which burst under Greenspan’s replacement, Ben Bernanke. Bernanke stunningly admits that the Fed prints money as needed. (And if you or I did that it’d be counterfeiting, so kids, don’t try that at home!)
Money For Nothing makes the Fed more comprehensible, as well as showing how the Fed is made up of humans, at times fallible and ego-driven, whose efforts can be at odds with our country’s and the world’s short- or long-term economic health.
Bottom image: Matthew Weinberg, original art, used by permission