Last night, I caught the tail end of Glenn Beck’s Fox News show. He was imploring his viewers to divest themselves of the extra things in their lives–have a garage sale, open an eBay account, etc.–and use the proceeds to invest in food storage. The reason, he argued, was the coming inflation that free-spending liberals and the money-printing Federal Reserve were foisting on the U.S. dollar, which would drive up the price of staples like bread and rice. There was something striking about this argument, which Noam Scheiber gets at in The New Republic today.
Once upon a time, the debate over inflation used to fall along class lines. Those with lots of money hated inflation, because it lowered the spending power of their capital. Those without a lot of money didn’t mind so much, since inflation ate away at their debts, making mortgage and credit card payments easier to pay. (Mild inflation can also spur investments, since no one wants to sit on a declining currency, jolting the economy and reducing unemployment.)
But in the current popular conservative debate, the benefits of inflation (your debts will be easier to pay off) are outweighed by the downsides of inflation, which have less to do with large bank accounts than basic consumables (eggs and milk will cost more). In the Beck discourse, inflation is an attack not on the money-hoarding aristocracy (the George Soros’ club), but on the working class, who are struggling to get by under the weight of an ever expanding government.
In Scheiber’s construct, this new approach is best explained by Sarah Palin, who has offered a Beck-like critique of the Federal Reserve’s recent quantitative easing. He writes:
What Palin is after here, of course, isn’t a debate over the finer points of interest-rate setting. It’s just the latest instance of her lashing out against meritocrats and intellectuals, whom she feels talk down to her and her fellow repositories of homespun wisdom. Palin has always practiced a kind of identity politics in which one’s views deserve privileged status by virtue of they’re not being informed by any specialized knowledge. Hers is a politics of resentment—resentment at being led by the sort of snobs who think governing requires expertise.
He compares this with the more traditional, egg-headed, gold-standard critique of the Federal Reserve, which he identifies with the Ron Paul/F. A. Hayek school of economics.
Stumping for his son last winter, Ron Paul announced his hope of leading an “intellectual revolution.” Both Pauls are steeped in the work of the Austrian economist F.A. Hayek; they lean heavily on the Hayekian idea that a small group of central planners (i.e., the Fed), no matter how sophisticated, can’t synthesize the vast amount of knowledge that’s diffused throughout the economy, leading to inefficient (or, worse, corrupt) decisions.
What is remarkable is that the Paul view and the Palin view are now singing the same tune. As Scheiber puts it, “Throughout American history, the affluent Pauls and the working-class Palinites have been blood enemies. The achievement of the modern conservative movement was to unite them in a general hostility to government.” Quite an achievement indeed.
And so, we as a nation calls for garage sales and seed bank purchases that run concurrently with calls for the Federal Reserve to stop concerning itself with lowering the unemployment rate. Those who have the most to gain from inflation–the heavily indebted–are encouraged to buy powdered milk and fear the faceless bureaucrats who might make their debts easier to pay. And those who have the most to lose from inflation–the very wealthy–can call themselves populists.