By Colin Barr
October 20, 2010

Is the Fed playing with fire?

Not just inflationary fire, mind you. A darker view of the downturn that started a few years back is that it threatens to destroy the very fabric of American society – and that the Fed, by steering us further down a path that doesn’t involve a return to the unimpeachable gold standard, will only speed that process up when it signs up for its next round of huge “QE.”

There is admittedly not an enormous body of evidence for this view, but let’s consider the arguments anyway. One argument is that savers getting no interest on their bank accounts, homeowners ripped off by rapacious lenders and workers facing declining job prospects will band together against their capitalist oppressors. Another not mutually exclusive idea is that economic distress will lead to soaring crime rates and a general return to conditions last seen by Kurt Russell in that sobering documentary Escape From New York.

Are the dystopianists onto something? That’s what Time’s Stephen Gandel wants to know as he asks whether the Fed will cause a civil war. For whatever reason I personally have a hard time imaginging the composition of the Fed’s balance sheet becoming a political issue on par with slavery, but I stress that’s just me.

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