Populists and bankers

Strange meeting

The populist left meets the populist right to hammer the Fed

A star of the tiny screen

DEMOCRATS seldom come more partisan than Alan Grayson, who represents Florida’s eighth congressional district in the House of Representatives. He calls Republicans “foot-dragging, knuckle-dragging Neanderthals” and a “selfish party” whose advice to sick Americans is “Die quickly.” Yet when he dropped in on a convention of small-government libertarians in his home town of Orlando, Florida, last year, he was greeted like a rock star. He received two standing ovations and requests for his autograph.

The audience was not applauding Mr Grayson’s stand on health care or any other beloved Democratic cause, but his unrelenting attacks on the Federal Reserve. Though he has been in Congress only a year, his cross-examinations of Fed officials there are YouTube sensations. One, in which he demands to know who got more than $1 trillion in Fed emergency loans, has been viewed more than 3m times.

Mr Grayson’s antipathy towards the Fed is part of a resurgence of political populism on both the left and the right. This week that upsurge even threatened Ben Bernanke’s confirmation for a second term as chairman of the Fed, as senators in both parties looked for a scapegoat for both the financial crisis and continuing economic hard times. One of the few things populists of both left and right agree on is that bankers have been rescued at the expense of ordinary Americans, with the Fed’s help (see chart). Mr Grayson and Ron Paul, a conservative House Republican from Texas who briefly flirted with the presidency in 2008, have already succeeded in tacking on to a larger financial-regulation bill an amendment that would expose more of the Fed to congressional scrutiny.

In Kentucky Mr Paul’s son Rand, an ophthalmologist, is running for the Republican Senate nomination and threatening to defeat the party’s preferred candidate there. Mr Paul junior spent his student years in North Carolina agitating against taxes, and his campaign is heavily staffed by founders of a local “tea-party”. He opposes abortion and gay marriage, but seldom raises either issue. Instead he hammers away at government spending, the budget deficit and the prospect that it will be inflated away by the Federal Reserve. “It’s what motivates me,” he says. “What happens to our country when you destroy a currency? Out of the Weimar Republic, they elected Hitler.”

Populism in recent years has been mostly a phenomenon of the right, arrayed against big government, taxes and social permissiveness. But the current wave bears similarities to the strains of the 1890s and 1930s. Back then, populists drew strength from anger with bankers and their government enablers for impoverishing workers, farmers and businessmen.

In the 1890s America’s adherence to the gold standard brought on deflation that crushed debt-laden farmers. William Jennings Bryan, the Democratic nominee in 1896, campaigned against the “cross of gold” and “the few financial magnates who, in a back room, corner the money of the world.” In the 1930s Father Charles Coughlin, a fiery populist priest, inveighed against “debt merchants”, the “ventriloquists of Wall Street” and the Fed, “a system owned by a group of your masters and not by the American people”. Huey Long, a governor and senator from Louisiana, attacked “imperialistic banking control” but, like many populists, made an exception for small banks, on whose behalf he forced changes to both Franklin Roosevelt’s banking reforms and the Fed.

Populism’s standard-bearers today also thrive on the anger fed by financial chaos: bail-outs, bankers’ big bonuses and record budget deficits. Mr Grayson hardly has a radical background. He holds three degrees from Harvard University (something he plays down, since it makes people less likely to vote for him) and worked as an economist before earning a fortune in telecoms and law. The Fed, however, is an effective way to grab voters’ attention. “There are very few issues”, he says, “that bring you into contact with numbers with 13 digits in them.”