On Populist programs and democratic central banking
Since Lehman collapsed in 2008, central banks have broken free of historical norms, channelling trillions into the banking system to prop up global finance and the savings of depositors from Germany to Hong Kong. The corona crash has only accelerated this emancipation. In April, the Bank of England helped the Johnson government finance an ambitious furlough scheme, while the European Central Bank stepped up their older quantitative easing program, pumping liquidity back into the bank sector. Swap lines by state banks have been set up in the United States, while the latest European recovery plan ratified an extension of the Pandemic Emergency Purchase program. Adam Tooze cast all of this as “a remarkable display of technocratic energy and imagination in western financial centers”—necessary to both “control the epidemic” and “restore the world economy.”
Amongst these institutions none possess as much luster as the American Federal Reserve. While other banks waver or bow to political leadership, the Federal Reserve’s action is swift and decisive, protecting against financial collapse at home while safeguarding assets abroad. Unsurprisingly, the Fed is often singled out as one of the greatest triumphs of capitalist statecraft, from its creation in 1913 under Woodrow Wilson to its decisive role in the neoliberal counterrevolution of the 1980s under Paul Volcker. Yet while the bank seemed deeply conservative for the intermittent period, its proactive capacity asserted itself with a vengeance in 2008, when Timothy Geithner’s New York Fed almost single-handedly saved the global financial system from collapse.