AND YET FOR all the historical lacunae, for all the threadbare evidence and inexplicable filial piety, Inflated is a difficult polemic not to take seriously, as both a terrifically brazen popularization of an arcane topic and a distillation of the spirit of the age. In a time of extremes–in feelings and deeds–the crank becomes something like a prophet.
Is Inflated the Das Kapital of the Tea Party revolution? Mr. Whalen’s meta-historical formula is–whatever its weak points as credible argument–nothing if not elegantly dialectical. On one end, we have “the American dream,” never positively defined, but easily inferred as basically individualistic, localist and antiauthoritarian (whether the authority is the state or the private elites), to the point of conspiracism. Mr. Whalen doesn’t really share this atavistic furor toward finance qua finance, but he understands it. He nicely explicates the Jeffersonian, then Jacksonian, mistrust toward central banking, and the sort of country it left, once the charter of the Second Bank of the United States was allowed to lapse in 1833. Namely, one in which the money supply was so illiquid and decentralized–with notes from private state-chartered banks accepted at one’s own risk–that, for most of the 19th century, America’s was “a barter economy.”
Money was a moral issue–which we might describe as policy pursued against all practical or utilitarian concern. As his last presidential act, Andrew Jackson promulgated the Specie Circular of 1836, which required payment for government land (recently confiscated from the Indians, naturally) in gold or silver, and promptly caused the Panic of 1837. The impetus for the executive order was concern over the contravening national impulse in Inflated‘s telling: what we might call the American pipe dream. For Jackson, paper money fed rampant speculation–the sort of American delusion in the availability of something for nothing that was to find its apotheosis, Mr. Whalen reckons, in the Gold Rush, which saw thousands literally trying to dig wealth out of the ground. By the turn of the last century, gold had become the problem for populists like William Jennings Bryan, who argued for a “bimetallic” currency backed by silver as well. For this new populism, government inaction became the sign of elite conspiracy.
As one might expect, Inflated is less sympathetic to the pipe-dream view of the state as guarantor of positive freedom–that is, welfare broadly conceived. But he recognizes it as no less grounded in moral sincerity. The unholy synthesis–let’s call it the 20th century–arises when politicians, acting on no deeper moral basis than the next election cycle, turn fiscal and monetary policy toward a sort of simulacrum of the old rugged individualism, conjured into being by the state and propped up with ever escalating private and public debt. Thus, homeownership predicated on government guarantees and wanton speculation backstopped by “too big too fail.”
Mr. Whalen’s heroes are fighters–Teddy Roosevelt, trust-buster yet pro-business libertarian–and engineers–Herbert Hoover, who literally was one. His rogues are alchemists: Abraham Lincoln, who funded the Civil War by printing greenbacks and decreeing their universal acceptance as “legal tender”; Franklin Roosevelt, who upon taking office in 1933 immediately seized all private gold from “hoarders” in exchange for $2 billion of newly printed, unconvertible bills; and Richard Nixon, who finished F.D.R.’s work by withdrawing from the postwar Bretton Woods exchange-rate mechanism, thereby devaluing the dollar and destroying the last vestiges of the gold standard.
Mr. Whalen has been a tenacious critic of deficit spending (that is, printing money) since the early 1990s, often suggesting, for instance, that the Federal Reserve be abolished. Why his analyst’s outlook gets its magnum opus today should be obvious–indeed, a YouTube search for “fiat currency” returns a library of cartoons and slide shows that suggest hard money has replaced 9/11 as the ground zero of American paranoia. At stake seems a basic fear of meaninglessness, of signifiers proliferating without anchor. In the moral universe of Inflated, the antagonists of Marx’s day–the worker, laboring for a wage, and the capitalist, turning labor into commodities–are compatriots against monetary nihilism, which is poised to devalue wage and capital alike.
Either America comes to grips with its profligacy, Inflated concludes, or the world will violently force us to, as the dollar recedes from its predominance as reserve currency. Like everything R. Christopher Whalen writes in this mostly smart, entirely self-satisfied book, he doesn’t exactly convince, but, in the tradition of the best crank histories, he sure as hell scares.