Radio Free New Hampshire: Joe And Donald And Lisa And Pierre

By Michael Davidow, InDepth NH

Inflation acts like half a tax. Only half, because while it takes cash from your pocket, our government itself receives nothing, so you can’t even hope for some abstract benefit to accrue. Your money goes to someone else -- your supermarket, your car dealership, your insurance agent. They in turn pay it along, because their suppliers need extra, too. Nobody benefits. Inflation hobbles both people and corporations.

That’s how it acts in the here and now. It also harms our economy moving forward. By muddying both personal and corporate planning, it imposes stress on investment strategies; it hurts companies who seek to expand, which hurts workers more. The strength of the dollar is even viewed as a surrogate for American influence abroad. Investors worldwide depend on the Fed to keep the dollar stable, which redounds to our nation’s benefit. For all these reasons, our leaders usually try hard to keep inflation at bay.

But like most taxes, inflation hurts some people more than others. It hurts people who have savings; it hurts people on fixed incomes. If you have no savings, you don’t have the pain of watching your bank accounts grow worthless. If your income can fluctuate, you can hope to beat higher expenses with a pay raise or a better job. Inflation therefore hurts older people more than younger people. It may even hurt the wealthier more than the poor (though the wealthier are always better positioned to withstand any sort of economic turmoil).

The Federal Reserve’s work can therefore be seen as deeply political. By aiming for low inflation, it’s taking sides in a big debate, and the progressive chorus has long criticized that fact (just like Donald Trump is doing now). If monetary policy helps the rich, then monetary policy needs to change.

Yet the downsides of inflation have always been so obvious that both major parties have typically preferred other methods to keep our nation’s economy fair that don’t involve tinkering with its money supply. Every dollar that our government spends, after all, reflects its chosen priorities. We can choose to spend it on corporate farms, we can choose to spend it to dig more oil from the ground, we can choose to spend it to teach children, protect our trees, help foreign nationals. That’s where policy debates belong.

In this mainstream view, the Fed’s job is not to direct federal funds. The Fed’s job is to make sure those federal funds are worth something, year after year. Yet Joe Biden had nothing in mind but the political uses of monetary policy when he appointed Lisa Cook to serve on the Fed’s board. Her academic and political interests consisted of studying the effects of government action on racial progress. She was expressly meant to bring a diversity of opinion to the Fed’s decision-making process; she was expressly meant to jolt its mission.

Republicans at the time objected vociferously. They moved against her in a solid block and were duly accused of being racist. It took Vice President Harris’s tie-breaking vote to confirm her nomination. Since then, interestingly, Ms. Cook has largely been quiet. It is not apparent from any public vantagepoint that her pioneering status has made much difference to how the Fed has operated at all. In particular, she has supported the Fed’s current chairman in his ongoing fight against Donald Trump’s attempts to stoke inflation to spur short-term growth. Ironies abound in American politics. Somewhere along the line, she actually read the job description.

Donald Trump is therefore doing great damage by seeking to remove her, but largely because he is doing with a cudgel what Biden sought to do with a hammer: using the Fed as a political tool. As he so often does, he gives the wrong answer to the right question. We can oppose him on this matter with good cause and honest exasperation. But history makes it hard for us to oppose him from any moral high ground.

I did some light reading this summer. I finally finished Tolstoy’s War and Peace. Spoiler alert: Napoleon loses. But towards the end of this handsome story, Tolstoy’s hero despairs of his country’s politics and advances a new idea for it: a political party that simply stands for doing what is right. Pierre is not a practical man. He is awkward in person, dreamy in affect, and given to following his emotions. Yet he advances a simple thesis as the basis for social action that remains worth considering: when the other side lies, Pierre seeks to be honest. I can only hope the opposition to Trump keeps that in mind. It will help forgive a great many mistakes going forward.

Editor’s Note: We welcome back Radio Free New Hampshire. Defense attorney Michael Davidow took a few months off from his column to finish his latest novel “Interdiction” about a veteran cop in a small New Hampshire town who shoots and kills a college student in a traffic stop gone awry. The ensuing investigation presents a tale of drug dealing, gunplay, and justifiable homicide. It is awesome and available on Amazon. Davidow is also the author of Gate City, Split Thirty, and The Rocketdyne Commission, three novels about politics and advertising which, taken together, form The Henry Bell Project, The Book of Order, and The Hunter of Talyashevka, Chanukah Land can be found here.

This article first appeared on InDepthNH.org and is republished here under a Creative Commons license.