The Weird Politicization of Money
I was reflecting on some questions I’ve had about gold, and one of the things that continues to puzzle me is the way that money is politicized. Money is inherently political, of course – monetary policy shapes the economy and often determines who wins and who loses. For example, the Populist uprising of the 1890s was all about money, specifically demanding greater inflation through a “bimetallic standard” because it would benefit the issuers of debt (farmers) over the issuers of credit (banks). The logic in that case is at least fairly easy to explain, especially since it was targeted at farmers who were well-acquainted with the realities of trade credit. The Tea Party case runs the other way, where despite holding shiny golden inflation hedges they are fighting for tighter money that would hurt their interest.
But there’s a deeper question here: how do people get so worked up about monetary policy? It’s a pretty abstruse topic, after all. The mysteries of monetary policy continue to flummox economists even in the year 2013, and these are people who have spent their entire lives studying it. While it is of massive political importance, often it’s not entirely clear who is hurt or helped the most by a given policy standard. Even more so, there aren’t really natural villains and heroes involved in monetary policy. And yet since the creation of fractional reserve banking, money has been a constant and often very virulent political battleground. Mass movements have been mobilized around it.
So what is the mechanism by which money becomes this topic for brutal and animalistic political debates? Most people don’t even understand the nature of money at either an intellectual or instinctual level. Is it elite-led, where party leaders and intellectual entrepreneurs do a great job of popularizing the issue? Or is it a topic around which grassroots politics spontaneously organizes even though it is so abstruse? Perhaps the opaqueness of the topic is actually what gets people riled up. Either way, it’s a bit of a mystery worth considering further.