Engine of Inequality

Chapter 9Remaking Money

“Papa! What's money?” …

Mr. Dombey was in a difficulty. He would have liked to give him some explanation involving the terms circulating medium, currency, depreciation of currency, paper, bullion, rates of exchange, value of precious metals in the market, and so forth; but looking down at the little chair, and seeing what a long way down it was, he answered: “Gold, and silver, and copper. Guineas, shillings, halfpence. You know what they are?”

“Oh yes, I know what they are!” said Paul. “I don't mean that, Papa. I mean what's money after all?... I mean, Papa, what can it do?” returned Paul, folding his arms....

Mr. Dombey drew his chair back to its former place, and patted him on the head. “You'll know better by-and-by, my man,” he said. “Money, Paul, can do anything.”

– Charles Dickens, Dombey and Son*

Mr. Dombey was a proud, wealthy merchant ultimately undone not because he misunderstood money's power, but because he failed to see that money's true worth is found only when money is shared. He is not the only one to make this costly mistake. The Fed's longstanding preference for saving markets, not households and small businesses, ensured that those who had money got still more from 2010 to 2020. And, as we have seen, financial policy after COVID made this still more true even as America grew still more unequal and angry. We thus know that financial policy has been an engine of economic inequality, but what we don't know yet is what powers the engine. ...