“When you or I print money it’s called counterfeiting,” a commentator muses in a new documentary about the Federal Reserve. “When the Fed does it, it’s called monetary policy.”
That documentary is Money For Nothing: Inside the Federal Reserve and that commentator was former St. Louis Fed Governor William Poole.
Charting 100 years of Fed history, the film features an impressive collection of economic actors and thinkers: Paul Volcker, Janet Yellen, Jim Grant, Peter Atwater, John Mauldin, Barry Ritholtz, Gary Shilling, and others. It’s also narrated by the dulcet tones of Liev Schreiber.
If Farhenheit 9/11 was Michael Moore’s seminal repudiation of George W. Bush’s foreign policy, Money For Nothing is writer/director Jim Bruce’s similar critique of the history of the Federal Reserve.
“The Fed is supposed to be the guardian of financial stability, preventing chaos in markets,” says 1994-1996 Fed Vice Chair Alan Blinder. “Now, usually it can do that. In the summer of 2008, it couldn’t do that and we did get chaos.”
The film’s chief villain is Alan Greenpsan, a one-time demigod who kept interest rates too low for too long, in Bruce’s telling. Volcker, on the other hand, is painted as a hero for sacrificing short term gain for long term stability during his tenure as Fed chief.
The crux of the film? The “hubris” of the Federal Reserve. Greenspan, once an infallible figure in American politics, sacrificed the long-term health of the country for short-term easy money and deregulation.
“I don’t think any of us who have ever worked at the Fed take any comfort from the fact that somebody screwed up,” says Peter Fisher, former Executive V.P of the New York Fed from 1994-2001. “But it’s important we recognise there were some big mistakes made.”
The film chastises Greenspan for thinking any bubble could be handled after the fact through interest rate adjustments. And according to Bruce, with QE the central bank today seems to have learned little from a century’s worth of examples of the long-term woes resultant from accommodative monetary policy.
Money For Nothing hits theatres in New York and DC on Friday, and you can view other release dates here.