I don't know what the Federal Reserve is. I don't know what they're doing."
So admitted comedian-commentator Bill Maher on his HBO talk show a few weeks ago, expressing a sentiment that, judging by the applause, was shared by many members of his presumably well-educated, media-consuming, studio audience. One of Maher's guests, humorist Joe Queenan, also fessed up to being pig ignorant of what the Fed is and does. And earlier that same week, Eliot Spitzer, the onetime sheriff of Wall Street, told MSNBC's Dylan Ratigan that the Federal Reserve "is a Ponzi scheme, an inside job" that must be closely examined by Congress.
Spitzer was referring specifically to the New York Fed, a distinction that quickly fell away as his ready-for-prime-time sound bite shot through a blogosphere intent on viewing anything to do with finance as part of a conspiracy theory. "That scared the hell out of me," Maher told his guests. "Despite what he likes in his sex life, [Spitzer] knows a lot about this."
Maybe he does, maybe he doesn't. But one thing Spitzer clearly knows is how to play to a crowd desperate to suss out villains in a financial crisis. And let's face it, the Fed is as good a target as any. Shrouded in secrecy, the central bank, which may see its powers broadened in a regulatory overhaul, remains a mystery to many. This is true, despite the truckload of media coverage devoted to economics and finance these past few months, including a special PBS NewsHour "forum" in late July in which Fed chairman Ben Bernanke took the unprecedented step of answering questions from 40 people from Kansas City, Mo. The first query came from a social worker who asked Bernanke to explain what, exactly, is the Federal Reserve. "I don't have a clue what they do," she told the chairman.
All of this eagerly professed ignorance got me thinking: What is it about anything that has to do with money, finance or economics that enables otherwise thinking people to plead total cluelessness? After all, most people work, earn money, use banks, save for retirement. The Supreme Court is no less secretive, mysterious, complicated or powerful than the Fed, but it's pretty hard to imagine someone like Maher declaring that he has no idea what the court is or what it does. But people have no problem wearing their financial ignorance on their sleeves. They're actually sort of proud of it. "I read as much of financial coverage as I can understand," media critic Jack Shafer wrote back in late 2007. "I'm not embarrassed by my ignorance -- why should I be? I can't be much more clueless than the masters of the universe who have lost their companies billions."
Well, actually, you can be, as Queenan proved that night on Maher. Indeed, another guest, historian Niall Ferguson, called out Queenan on his ignorance (earlier, Queenan proclaimed that Obama's approval rating would be better if the Dow simply hit 10,000, healthcare, war and unemployment be damned) and proceeded to school him on the Fed and how it works. Queenan's snide response (which he repeated several times): "I didn't go to Harvard." No, he didn't, but he did once work at Forbes.
OK, now we get it: Only smarty-pants, wonkish types get this stuff. The cool kids don't know it, don't understand it, certainly don't want to study up on it, and, if like Ferguson, you do get it (and you actually teach at Harvard), you're not just elitist, you're suspect. Unaccessible. An apologist. Maybe you're even in cahoots with all those guys on Wall Street with their bailout-fueled bonuses.
The odd thing here is that many areas of finance are complex, even inaccessible, though the fundamentals, like the functions of the central bank, aren't. And it's arguably never been more important, particularly given the fact that every taxpayer owns chunks of some big banks, that ordinary Americans bone up on the subject. Instead, the attitude du jour seems to be to cheer on the notion that the Fed, which you may have the sketchiest understanding of, is a Ponzi scheme, or that Goldman, Sachs & Co. is a vampire squid that caused every bubble, or that Lehman Brothers Holdings Inc. was brought down by eight evil men who treated the 24,992 salt-of-the-earth geniuses who worked for them like crap. It's almost like folks secretly want to encourage the very thing they fear. The cartoon is so much more satisfying than the truth.
Yvette Kantrow is executive editor of The Deal