“Money for Nothing: Inside the Federal Reserve” is a slick, thoughtful and alternately infuriating-and-funny documentary that premiered in New York’s Florence Gould Hall last night. It gives the U.S. central bank a pretty thorough lashing, especially Alan Greenspan. The former Fed Chairman is strung up like a piñata and smacked around as the culmination of long-misguided U.S. monetary policy that, crisis after crisis, lacks the creativity and courage to remove the proverbial punch bowl when the time is right.
The film, by writer and director Jim Bruce, is narrated by Liev Schreiber but almost doesn’t need him given the series of interviews that drive an account of the Fed over the 100 years of its existence. Paul Volcker, Alice Rivlin, Charles Plosser, Jeffrey Lacker, Allan Meltzer, Raghuram Rajan, Alan Blinder and Jim Grant are among those who weigh in. Oh and Janet Yellen, but not Lawrence Summers.
The midtown Manhattan audience of economists and investors hooted and howled at decade-old footage of Greenspan telling a congressional committee that bank regulators have no clue how derivatives work so should simply let Wall Street police itself in the years to come; Timothy Geithner is seated just off the Maestro’s right shoulder, and the film shines a wry spotlight on the man who would run the New York Fed as Wall Street collapsed into crisis a few years later.
The thesis – adorned with steep economic graphics and never-ending images of money-printing presses – seems to be this: The Fed’s full employment mandate warps its decision-making, tempting it to inflate consumer prices (’60s/’70s) then stocks (’90s) then housing (2000s) and possibly now, thank you very much Chairman Ben Bernanke, government debt. Essentially, there just aren’t enough Volckers to go around. (Before that, when inflation was the sole mandate, the Great Depression was the result of Fed policymakers’ close-minded desire to protect U.S. stockpiles under the global gold standard, the film argues.) All the while, this warped monetary policy-making encourages an American obsession with consumption that is unsustainable and will inevitably lead to more booms and even more severe busts.
The solutions are a bit vague and you’ve heard them all before: innovation, education, bold politics focused on the longer term, etc. Oh and don’t saddle our children (or grandchildren) with any more debt than they will already, inevitably, carry.